Group Assignment on“Kohler (A) M&A Valuation”Submitted toINSTRUCTOR: ___________________In partial fulfillment for requirements of the courseMergers and Acquisitions (2012-2013)ByGroup K On19 November 2012 | Contents EXECUTIVE SUMMARY 3 Why does Herbert Kohler wants to do the recap 4 Calculation of Enterprise value 4 Using Discounted cash flow method 4 Dividend Growth Model 7 Comparable Companies Analysis 8 Valuation Summary 9 Justifying the share price of $ 55‚400 10 Defending $270
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Kohler Co. began as a manufacturer of plumbing fixtures in Sheboygan‚ Wisconsin in 1883. John Michael Kohler‚ an Austrian immigrant‚ who for ten years prior to that‚ produced farm implements and yard ornaments‚ started the company. John Michael’s son‚ Walter J. Kohler Sr. became president and CEO in 1905 after his father’s death. Walter headed the company for 35 years. Under his control‚ Kohler became one of the leading plumbing fixtures manufacturers in the country after introducing numerous innovations
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Kohler Co. Summary: Kohler is one of the largest and oldest privately held companies in America. It started by manufacturing plumbing fixtures‚ famously inventing the first modern bathtub‚ and soon after began manufacturing small engines and generators. Today the company is also in the furniture and luxury resort business. Most of the company’s shares are held by members of the Kohler family‚ however 4% of the outstanding stock is owned by outsiders. Herbert Kohler Jr.‚ the CEO and Chairman of
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Introduction Kohler Company was faced with a very tough decision of whether or not to settle outside of court or go to court to settle with the dissenting shareholders. We will take you through the history of the company and why they recapitalized. Also‚ we will touch on some of the risks of going to trial to have the courts set a price. We have also broken down the numbers and found many different prices found by using the dividend growth model and the multiples approach. We will also show how different
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Kohler (A) case questions (each question carries up to 20 points) 1) Who are the winners and losers from Kohler’s 1978 stock split? Kohler Co. has always been a private company. CEO and Chairman Herbert Kohler stated that this private status contributed greatly to the success of Kohler Co. He mentioned several arguments to back up this statement. First of all‚ a privately owned company is not required to publish financial and non-financial information about its operations to the public. Herbert
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Kohler Case Study I. Enterprise Value of Kohler Tax Rate = 34% Debt to Value = .464 or 681‚038/1‚467‚373 Debt to Equity = .536 or 786‚335/1‚467‚373 Risk Free Rate = 20 yr government bond = 6.0% Market Return on Debt = 6% Market Return on Equity = 2002 Net income/ Average Stockholder’s equity 1998-2002 108‚229/924‚800= 11.7% WACC: (1-.34)*(.06)*(.464)+ (.117)*(.536)= 8.11% II. Estimated Share Price of Kohler - $55‚400 vs. $270‚000 The $55‚400 price per share is an undervalued
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Wolfgang Kohler Psychology 422 Wolfgang Kohler was born in Reval‚ Estonia in 1887. Both of Kohler’s parents were of German decent‚ and shortly after he was born‚ Kohler and his moved to Wolfenbuttell‚ Germany. The importance of education was introduced to Kohler earlier in life. His father was a schoolmaster‚ his sisters were nurses and educators‚ and Wilhelm‚ his older brother‚ was a scholar. As a child Kohler loved both the outdoors and classical music (Dahl‚ 2005). He even learned how to play
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QUESTIONS CASE KOHLER CO. 1. What is the total enterprise value of Kohler Co. using a Discounted Cash Flow approach? What is the total enterprise value using a multiples (market value of comparable companies) approach? What is the value of a share held by a minority shareholder in Kohler Co. that is implied by your valuations? 2. What assumptions can you use to arrive approximately at the share price of $55‚400 that was estimated by Kohler Co.? Show how these assumptions impact your valuation. 3
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Background Kohler Co. was founded in 1883‚ by John Michael Kohler‚ in Sheboygan‚ Wisconsin. One of the oldest and largest privately held firms in the US‚ Kohler Co.‚ in 1998‚ employed 17‚500 employees and reached over $2 billion in sales. Its business portfolio ranged from its well-known plumbing fixtures to small engines and generators; and recently diversifying into furniture and luxury resorts. Known for its ability to innovate‚ Kohler Co. considered one of its main core competencies its ability
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VALUATION TECHNIQUES Vault Guide to Finance Interviews Valuation Techniques How Much is it Worth? Imagine yourself as the CEO of a publicly traded company that makes widgets. You’ve had a highly successful business so far and want to sell the company to anyone interested in buying it. How do you know how much to sell it for? Likewise‚ consider the Bank of America acquisition of Fleet. How did B of A decide how much it should pay to buy Fleet? For starters‚ you should understand that the value
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