CORPORATE RESTRUCTURING

TÁI CẤU TRÚC DOANH NGHIỆP

Bà Liên Công, MBA, FCCA
Phó Tổng Giám đốc một công ty đa ngành
Giảng viên CMA, ACCA tại Smart Train
 CORPORATE RESTRUCTURING

1. Corporate restructuring – introduction and concept

2. Forms of corporate restructuring
 Merge and acquisition
 Other forms of corporate restructuring
3. Valuation method for merge and acquisition
 CORPORATE RESTRUCTURING INTRODUCTION AND CONCEPT
WHAT IS CORPORATE RESTRUCTURING

- Corporate restructuring is the process involved in changing the

organization of a business.

- Corporate restructuring can involve making dramatic changes to

a business by cutting out or merging departments.

- It implies rearranging the business for INCREASED

EFFICIENCY AND PROFITABILITY.

 CORPORATE RESTRUCTURING INTRODUCTION AND CONCEPT
WHAT IS CORPORATE RESTRUCTURING
- Corporate Restructuring is the process of significantly changing

 a company's business model,

 management team

 financial structure

- Restructuring may involve

 major layoffs or bankruptcy

 the company's sale or a merger with another company..

 CORPORATE RESTRUCTURING INTRODUCTION AND CONCEPT
WHAT IS CORPORATE RESTRUCTURING

The restructuring process requires various aspects to be

considered before, during and after the restructuring.
• Valuation & Funding
• Legal and procedural issues
• Taxation and Stamp duty aspects
• Accounting aspects
• Competition aspects etc.
• Human and Cultural synergies
CORPORATE RESTRUCTURING INTRODUCTION AND CONCEPT

WHY
What is the fundamental
problem to be solved?

HOW
What forms and methods should
be used to fix the problem and
create gain?

WHEN
At what stage, the restructuring should be
implemented to achieve the objective of
restructuring
 CORPORATE RESTRUCTURING INTRODUCTION AND CONCEPT

Why Restructure? Some Reasons

 Address poor performance:
the company's current business strategies as insufficient to prevent a loss on
their investments
loss of market share
the reduction of profit margins
or declines in the power of their corporate brand
the inability to retain talented professionals
and major changes to the marketplace that directly impact the corporation's
business model.
 Exploit strategic opportunities
 Correct valuation errors
 CORPORATE RESTRUCTURING INTRODUCTION AND CONCEPT

OBJECTIVE OF CORPORATE RESTRUCTURING

 orderly redirection of the firm's activities;

 deploying surplus cash from one business to finance profitable
growth in another;
 exploiting inter-dependence among present or prospective
businesses within the corporate portfolio;
 risk reduction;
 development of core competencies
 mix of loan and equity funds
CORPORATE RESTRUCTURING INTRODUCTION AND CONCEPT

Create synergies to maximize shareholder wealth by:

• Obtaining other assets, skills, or technology
• Achieving economies of scale
• Obtaining customers
• Achieving faster growth
• Diversifying to mitigate risky investments
• Using tax facilities to reduce company’s effective tax rates
CORPORATE RESTRUCTURING INTRODUCTION AND CONCEPT

How Restructure?

 Fix the ownership/control

Shareholders

Assets Debt
 Fix the business (operating  Fix the financing
cashflow) Equity

 Create or preserve value

 Negotiate distribution of the value

CORPORATE RESTRUCTURING CASE STUDY
CORPORATE RESTRUCTURING FORMS OF RESTRUCTURING

How Restructure?

Restructuring

Change
Improve Improve debt
ownership
capitalization composition
and control
CORPORATE RESTRUCTURING FORMS OF RESTRUCTURING

Various types of corporate restructuring strategies include:

1. Merger and aquisition

2. Other types of corporate restructuring

3. Business failure
CORPORATE RESTRUCTURING MERGE AND ACQUISITION

ORGANIC

OR

INORGANIC
CORPORATE RESTRUCTURING MERGE AND ACQUISITION
CORPORATE RESTRUCTURING MERGE AND ACQUISITION
CORPORATE RESTRUCTURING MERGE AND ACQUISITION
 Mergers and Acquisitions
Merger (acquisition): a combination whereby two or more companies become one legal entity

Consolidation: a combination when two or more companies establish a new company from the
merged ones
 Mergers and Acquisitions

Acquisition: is the purchase of all of another firms’ assets or a control interest in its stocks

An acquisiton of stocks may eventually result in the merger or consolidation of the two firms

Takeover is usually used in the description of business combination. It signifies a shift of

control from one set of shareholders to another (friendly or hostile)

Takeover includes not only merger and acquisition but also proxy contest and going private
- Proxy contest: an attempt by dissident shareholders to gain control of corporation or
at least gain influence by electing directors
- Going private: entails the purchase of the publicly owned stock of corporation by a
small group of private investors (usually including senior manager)
 Mergers and Acquisitions
Opposition to combination
- Green mail: A targeted repurchase is a defensive tactic used to protect against
takeover

- Staggered election of directors:

- It requires new shareholders to wait serveral years before being able to place their
own people on the board
- Another antitakeover amendment to the corporate charter may require a
supermajority for approval of a combination

- Golden parachutes: are provision passed by a BOD requiring large payments to

specific executives if their employment is terminated by the acquiring firm following a
takeover
 Mergers and Acquisitions
- Going private and LBO
- Poinsion pill:
CORPORATE RESTRUCTURING OTHER FORMS

1. Disinvestment
2. Demerger
3. Sell off
4. Spin off
5. Carve out
6. Management buy out
 CORPORATE RESTRUCTURING OTHER FORMS
Unbundling Assets sold Ownership Note
form
Divestment - Partial or complete physical and - Shut down business -To eliminate business which is
organisation assets  No longer own the business not in line with the company’s
strategy

Demerger - Distribution of assets - Shareholder remains the same % -Split up of a corporate body
ownership in split up companies into two or more separate and
independent bodies

Sell off - A part of company - New shareholder will come - To generate cash

Spin off - Distribution of assets - Parent company will own the new - Create new company
one
Carve out - Distribution of assets and sell the new -Parent company and new - Create new company
company assets shareholder will own the new
company’s share

Management - Partial or complete of business -Management of the company will - Usually fund by venture
buy out be the owner capital
 CORPORATE RESTRUCTURING CASE STUDY
Masan sẽ nhận 83,74% tổng số cổ phần phổ thông đang
lưu hành của VCM, đồng thời phát hành quyền chọn
được nhận cổ phần của một công ty hợp nhất là công ty
con của Masan.
SK Group, ký kết hợp đồng mua lại 16,26% cổ phần tại
Công ty VinCommerce (công ty mẹ sở hữu chuỗi bán lẻ
VinMart và VinMart+) với mức giá 410 triệu USD. Giao
dịch định giá VinCommerce ở mức 2,5 tỷ USD.

Tập đoàn này đã phải nhận khoản lỗ hơn 100 triệu USD
sau thương vụ mua lại VinCommerce.

9 tháng đầu năm 2019, mảng bán

lẻ lỗ gần 3.500 tỷ đồng.
CORPORATE RESTRUCTURING CASE STUDY
 CORPORATE RESTRUCTURING CASE STUDY
Tháng 12/2013, Vinamilk mua 70% cổ phần tại Driftwood Dairy Holding
Corporation .Driftwood là một trong những nhà sản xuất sữa lâu đời tại Nam
California, Mỹ với danh mục sản phẩm gồm sữa tươi, sữa chua, kem, nước trái
cây. Khách hàng của Công ty bao gồm các trường học, nhà hàng, khách sạn, nhà
phân phối, ... tại khu vực Nam California

Tháng 1/2014, Vinamilk thành lập liên doanh sản xuất sữa tại Campuchia với
tên gọi Angkor Dairy Products Co., Ltd ("Angkormilk")

Tháng 5/2014, Vinamilk thành lập công ty con ("Vinamilk Europe") tại Ba Lan . Mục
tiêu hoạt động của công ty là thu mua nguyên vật liệu chất lượng cao phục vụ cho hoạt
động sản xuất sữa của Vinamilk và các công ty con khác.

Năm 2017 - Vinamilk mua lại 65% cổ phần của Nhà máy
đường Khánh Hòa

Vào tháng 11/2018, Vinamilk đã hoàn tất giao dịch mua 51% cổ phần của Lao-
Jagro DevelopmentXiengKhouang Co.,. Ltd. Hoạt động chính của công ty là chăn
nuôi bò sữa và kinh doanh sản phẩm nông nghiệp.

Năm 2019 - Vinamilk chính thức thành công ty mẹ của GTNFoods,

qua đó gián tiếp sở hữu 51% quyền biểu quyết tại Sữa Mộc Châu.
 CORPORATE RESTRUCTURING CASE STUDY
Ông Trần Bá Dương đã bỏ 27.000 tỷ đồng vào Công ty Nông nghiệp quốc tế Hoàng Anh Gia Lai
CORPORATE RESTRUCTURING CASE STUDY
CORPORATE RESTRUCTURING CASE STUDY
 CORPORATE RESTRUCTURING CASE STUDY

Inspire Brands completes purchase of Dunkin’ Brands

Group for $11.3 billion

With the acquisition of the Dunkin’ and Baskin-Robbins

brands on Tuesday, Inspire Brands now encompasses
almost 32,000 restaurants globally
Techniques Used to
Value a Merger

32
CORPORATE RESTRUCTURING VALUATION TECHNIQUE

1. Net asset value

1. Book value
2. Market value
1. Net replacement value
2. Net realized value = Market value – cost to sell
2. Multiple
1. Book value multiple
2. Revenue multiple
3. EBITDA multiple
4. Net profit multiple (PE)
3. Cashflow
1. Dividend model
2. Free cashflow model
CORPORATE RESTRUCTURING VALUATION TECHNIQUE

1. Price to earning ratio (PE ration)

1. Trailing PE
2. Leading PE
 Question: Comparative Price-Earnings Ratios
If no synergistic benefits are expected, what is the maximum
exchange ratio ABC should agree to if it wants no dilution in EPS?

ABC XYZ Combined

Sales $600 million $75 million $675 million

Net Income $30 million $10 million $40 million

Outstanding shares of 6 million 4 million 8 million

common stock

Earnings per share $5.00 $2.50 $5.00

MPS $50 $20 $50

Answer: ABC would trade 2 million of its shares for 4 million

XYZ shares, resulting in a 1 for 2 ( 0.5 to 1) exchange ratio
35
CORPORATE RESTRUCTURING VALUATION TECHNIQUE
 CORPORATE RESTRUCTURING VALUATION TECHNIQUE
1. EBITDA multiple
The price represents a premium of 29% to MJN's undisturbed closing price on February 1,
2017 before market speculation of a potential transaction. Including Mead Johnson's net
debt of $1.2 billion as of December 31, 2016, the total enterprise value of the transaction is
$17.9 billion, representing a multiple of 17.4x 2016 non-GAAP EBITDA.
https://www.meadjohnson.com/news/press-releases/mead-johnson-nutrition-agrees-be-
acquired-reckitt-benckiser

2. Sales multiple
Năm 2015, Mondelez International chính thức lộ diện và mua đứt 80% cổ phần của
Công ty CP Kinh Đô Bình Dương với giá khoảng 370 triệu USD (gần 8.000 tỷ đồng).
Đồng thời, Công ty CP Kinh Đô đổi tên thành Công ty CP Tập đoàn Kido (Kido
Corporation).
Doanh thu 2014: 4,944 ngàn tỷ; Lợi nhuận: 536 tỷ
 CORPORATE RESTRUCTURING VALUATION TECHNIQUE
CJ đã mua xong 71,6% Cầu Tre, đổi tên thành CJ Cầu Tre

Báo cáo tài chính hợp nhất năm 2016 của công ty cho thấy, doanh thu thuần đạt 780 tỷ đồng. Lợi
nhuận trước thuế đạt 2,3 tỷ

Cầu Tre có vốn điều lệ 117 tỷ đồng và lỗ lũy kế gần 19 tỷ đồng. Tính ra giá trị sổ sách của doanh
nghiệp chỉ hơn 11.000 đồng với một kết quả kinh doanh khá ảm đạm. Vì thế, mức giá 65.000
đồng/cổ phiếu – tương ứng định giá công ty ở mức 760 tỷ đồng (33 triệu USD) khiến nhiều
người bất ngờ.
 CORPORATE RESTRUCTURING VALUATION TECHNIQUE

 Vingroup cân nhắc IPO VinFast tại Mỹ, dự kiến thu về 3 tỉ USD

 Sữa Quốc tế (IDP) chuẩn bị lên sàn được định giá gần 3.000 tỉ đồng

Dự kiến cả năm 2020, doanh thu của IDP có thể đạt mức
3.850 tỉ đồng, báo lãi sau thuế 500 tỉ đồng.
CORPORATE RESTRUCTURING VALUATION TECHNIQUE

Cashflow method

1. Dividend method:
2. Company cashflow method
CORPORATE RESTRUCTURING VALUATION TECHNIQUE

Dividend model
Assumptions of dividend models
(a) Investors act rationally and homogenously.
(b) The D0 figure used does not vary significantly from the
trend of dividends.
(c) The estimates of future dividends and prices used, and
also the cost of capital are reasonable.
(d) Investors' attitudes to receiving different cash flows at
different times can be modeled using discounted cashflow
arithmetic.
THE DIVIDEND GROWTH MODEL
 Assumptions of dividend models
(e) Directors use dividends to signal the strength of the company's position (however
companies that pay zero dividends do not have zero share values).
(f) Dividends either show no growth or constant growth. If the growth rate is calculated
using g=bR, then the model assumes that b and R are constant.
(g) Other influences on share prices are ignored.
(h) The company's earnings will increase sufficiently to maintain dividend growth levels.
(i) The discount rate used exceeds the dividend growth rate
 Financial factors that may affect resultant value
(i) forecast of next year's earnings may be overstated.
(ii) The total market value of the company's shares is below the net asset value.
(iii) high gearing ratio.
(iv) low dividend payout ratio
(v) Strategic impact
 CORPORATE RESTRUCTURING VALUATION TECHNIQUE
Example:
Assuming:
• $3 dividend per share last year
• Analysts expect dividends to grow at a constant rate of 6% per
year
• Investors expect to receive a 12% return
D1 $3.18 $3.18
V0 = = = = $53.00
k s  g 0.12  0.06 0.06
Where:
D1 = $3.00 (1.06) = $3.18
k s = 0.12
g = 0.06 43
CORPORATE RESTRUCTURING VALUATION TECHNIQUE

Assuming:
• A company pays an annual cash dividend of $5 per share.
• Analysts expect no change in the policy.

• Investors require a required rate of return of 12%.

D $5
V0 = = =$60.00
k s 0.12

44
 Variable Dividend Growth Example

• Analysts expect dividends will grow at an annual rate of 20% for the next three years
and then level to a normal growth rate of 5%.
• A company recently paid an annual cash dividend of $5 per share.
• Required rate of return is 12%.

P3 = D3(1+g)/ks – g
D3 = $5(1.2)3 = $8.64
g = 5%
Ks = 12%

$8.64(1.05) $9.07
P3 = = =$129.57
0.12  0.05 0.07

45
Variable Dividend Growth Example, continued
$8.64(1.05) $9.07
P3 = = =$129.57
0.12  0.05 0.07

Present
Year Income PVIF at 12% Value of
Income
1 D1 = $5(1.20) = $6.00 x 0.893 = $5.36
2 D2 = $6.00(1.20) = $7.20 x 0.797 = 5.74
3 D3 = $7.20(1.20) = $8.64 x 0.712 = 6.15
P3 = $129.57 x 0.712 = 92.25
Total present value $109.50

46
Free cashflow to firm:
After tax operating cashflow (pre-interest) cashflow
EBITDA
– less: tax paid
– less: changes in working capital
– less: capital expenditure
= Free cashflow to firm FCF * (1+g)
k -g
Terminal value

Terminal value at a point of time =

Value of the target company

Total discounted Free cashflow to firm – Debt + Cash
CORPORATE RESTRUCTURING VALUATION TECHNIQUE

WHAT VALUATION MODEL SHOULD BE USED IN CORPORATE

RESTRUCTURING

VALUATION IS A KEY TO UNLOCK VALUE

- Value with and without restructuring

- Consider means and obstacles
- Who gets what?
- Minimum is liquidation value
CORPORATE RESTRUCTURING VALUATION TECHNIQUE
Example
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