| Summary: | This work is an analysis of the potential acquisition of WhiteWave by PepsiCo, two US publicly-traded players of the food and beverage industry. WhiteWave is a market leader in the emergent segments of the industry, including plant-based beverages and organic dairy. The firm presented a solid growth performance over the last periods and this trend is expected to continue as consumers are shifting their preferences from unhealthy food to protein, fiber, whole grains and organic products. A combined firm would benefit from the established presence of WhiteWave in the growing segments of the industry and the scale and expertise of PepsiCo. Together, they would combine the target’s skills in developing products with high consumer loyalty and growth potential, with the acquirer’s production’s capacity, scale and financial resources. We began by analyzing both firms separately using three valuation methods: the DCF-WACC, the APV and the market multiples approach. Using these three methods, we concluded that WhiteWave has an enterprise value between $8,601 and $9,634 million and PepsiCo one of $178,833 to $196,778 million. We calculated the value of the synergies by analyzing the impact of the acquisition on the target’s costs and growth opportunities and used its cost of capital as the discount rate. The total value of synergies is between $873 million and $1,182 million, of which approximately 75% is the result of cost savings. We recommend PepsiCo to acquire WhiteWave for a share price of $46,61 in cash, representing a 12% premium over the target’s market value1.
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