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Leveraged Buyout: Vilka förutsättningar finns för en LBO av Cloetta Fazer AB?
Linköping University, Department of Management and Economics.
Linköping University, Department of Management and Economics.
2005 (Swedish)Independent thesis Advanced level (degree of Magister)Student thesis
Abstract [en]

The number of LBOs in Sweden has increased during the last years and the current market trend is positive. MostLBOs involves private companies, but a few concerns public corporations on the national share market. In this thesis we will examine the conditions of a LBO of Cloetta Fazer AB. The purpose is to study existing conditions of Cloetta Fazer AB and to examine pros and cons with the deal. Based upon information presented in the frame of reference and in the empirical part, two cash flow valuations have been carried out. The first valuation is a regular discounted cash flow valuation while the other is a specific LBO valuation. In a LBO valuation the debt terms and the changed capital structure is taken into consideration. The valuations are followed by an analysis where LBO conditions as well as pros and cons are examined.

Positive conditions for Cloetta Fazer AB are insensitiveness of market fluctuations, a strong market position, stable cash flows, low risk and strong product trademarks. There is also a possibility of increasing the expected rate of return with more leverage since the current financial structure can take on more debt. We argue that a LBO of a public corporation is surrounded by limited information due to legal restrictions such as insider rules. Limited information makes it difficult to motivate value creation. Other factors that obstruct a LBO of Cloetta Fazer AB is increased market competition, indistinct possibility of rationalising the business and a high EV/EBITDA multiple. We have also found that the IRR value is too low. Due to the fact that a LBO requires a premium of at least 20 % over market value, it is difficult to argue for a LBO of Cloetta Fazer AB.

Place, publisher, year, edition, pages
Ekonomiska institutionen , 2005. , 111 p.
Keyword [en]
Business and economics, LBO, private equity, buyouts, valuation, Cloetta Fazer AB
Keyword [sv]
National Category
Economics and Business
URN: urn:nbn:se:liu:diva-96ISRN: LIU-EKI/EP-D--05/022--SEOAI: diva2:24025
Available from: 2005-10-25 Created: 2005-10-25

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