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5. How attractive to PepsiCo is the proposal to buy 30% of Deltex for 1.1B pesos (US$360M)?
Based on the information in the case, Pepsi could invest US$360 million in exchange for 30% equity of Deltex. So we have to calculate the value of 30% equity of Deltex. First, we calculated the discount factor by using average unlevered beta of US independent bottlers, US 10 year Treasury bond as risk free rate and assuming market risk premium 10%. We came up with 9.83% of WACC. Next, we calculated Deltex free cash flow and terminal value and then converted them into US dollar value. Now with WACC and total cash flow, we had NPV of the company. So we deducted current debt from NPV and came up with the value of US$360M investment equal to 59.99% of Deltex equity. So the proposal to buy 30% of Deltex with US$360M is too expensive to PepsiCo and not attractive to PepsiCo.
If we look at the sensitivity analysis, we find as WACC increases, the percentage of US$360M investment in Deltex also......
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Title: Pepsi In Cuba
Approximate Word Count: 718
Approximate Pages: 3 (250 words per double-spaced page)
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Pepsi In Cuba
Pepsi In Cuba. 5. How attractive to PepsiCo is the proposal to buy 30% of
Deltex for 1.1B pesos (US$360M)? Based on the information ... ... -
History Of Pepsi-Cola
... Pepsi began operations in Canada, Cuba and England and moved its main offices and
bottling plant to Long Island City, NY (Prendergast, 1993) No Money for Radio ... ... -
Pepsi
... Then in 1998, an antitrust lawsuit from Pepsi - Cola challenged Coca-Cola's ...
international bottling and distributing plants were established in Panama and Cuba. ... ... -
Vietnam
... Already most major companies such as Coke, Pepsi, Colgate, Mobil Oil, Caterpillar,
and ... 3. Many people have stated that they feel that Cuba is more deserving of ... ... -
History Of Coca-Cola
... around most of the popularity of the company as in Canada, Germany, and Cuba. ... He
lived to see many challenges such as Pepsi and many accomplishments such as ... ...
