When Saint Gobain Acquires Bpb
Birmingham Business School
MBA International Business 2005/06
07 15442: INTERNATIONAL BUSINESS FINANCE
Lecturer: Dr John Cadle:
Cross Border Acquisitions:
When Saint-Gobain acquires BPB
Student ID: 797300
Length: Approx.3000 words
OUTLINE
Executive summary P3
Introduction: When Saint-Gobain acquires BPB P4
Synergies thought to be gained from such acquisition P5
Operational synergies P5
Financial synergies P7
The valuation of such acquisitions ( methods and problems) P9
Valuation of the current value of the target company. P10
Problem: the valuation of the potential synergies to be gained P11
Conclusion
P12
References
P13
Appendixes
P15
Executive summary
By the end of 2005, Saint-Gobain, a French leading producer, processor and distributor of materials, acquired for 5.8 billion the company BPB, British Plastic Boarder, the English leader in plasterboard: This acquisitionwill allow the French Company to become the world leader in building interior solutions.
The motive of this acquisition, as for any M&A, is to take advantage of the synergistic benefits to increase the company share value. In fact, there are multiple synergies to be gained from such acquisition: These synergies could be divided into operation synergies and financial synergies: While operational synergies mostly affect the operations of the combined firms and generally show up an increasing Cash Flow, the financial synergies are much more focused and may result in higher cash flows for the company but could also take the form of lower discount rates (A. Damodaran, 2005).
The board of Saint-Gobain believes that the acquisition of BPB will provide an access to key markets, a wider portfolio of activities, the acquisition of technical skills and the economies of scales resulting from a combined product offering and the sharing of commercial, operational and logistic practices. In addition to these operational synergies, more
MBA International Business 2005/06
07 15442: INTERNATIONAL BUSINESS FINANCE
Lecturer: Dr John Cadle:
Cross Border Acquisitions:
When Saint-Gobain acquires BPB
Student ID: 797300
Length: Approx.3000 words
OUTLINE
Executive summary P3
Introduction: When Saint-Gobain acquires BPB P4
Synergies thought to be gained from such acquisition P5
Operational synergies P5
Financial synergies P7
The valuation of such acquisitions ( methods and problems) P9
Valuation of the current value of the target company. P10
Problem: the valuation of the potential synergies to be gained P11
Conclusion
P12
References
P13
Appendixes
P15
Executive summary
By the end of 2005, Saint-Gobain, a French leading producer, processor and distributor of materials, acquired for 5.8 billion the company BPB, British Plastic Boarder, the English leader in plasterboard: This acquisitionwill allow the French Company to become the world leader in building interior solutions.
The motive of this acquisition, as for any M&A, is to take advantage of the synergistic benefits to increase the company share value. In fact, there are multiple synergies to be gained from such acquisition: These synergies could be divided into operation synergies and financial synergies: While operational synergies mostly affect the operations of the combined firms and generally show up an increasing Cash Flow, the financial synergies are much more focused and may result in higher cash flows for the company but could also take the form of lower discount rates (A. Damodaran, 2005).
The board of Saint-Gobain believes that the acquisition of BPB will provide an access to key markets, a wider portfolio of activities, the acquisition of technical skills and the economies of scales resulting from a combined product offering and the sharing of commercial, operational and logistic practices. In addition to these operational synergies, more