Team –

Baldwin(Industry 2)
Guhapriya Sridhar
Swetha Srinivasan
Vani Sondhi
Krishan Ranjan
Rudi Rajukumar
 Current Position
19.4% 9.3%
Low Tech Market Share High Tech Market Share
Products Bam and Baker Product Brat

Low Tech
High Tech

59.11 Stock Price 11,377

Profit
Stock Price Profit
Debt free, No interest Company Average customer satisfaction,
contribution margins of 28.21%
 Synergies Identified

Similarity In Cost Synergy Investor To gain High

strategies through Variable Confidence Market Power
Costs

Larger Network Increased Cash Brand Synergy Harmonized

(High Tech) Flows Pricing
 Value Creation

- Market Power

- Reduced Cost

- Better Access to High Tech

- Increased Cash Reserves

Value
Creation - Joint Market Analysis

- Reduced Cost of Equity

- Resource Sharing(Automation)
 Value Creation

Joint Market Share

Low Tech – 34.3%

Profit Sharing High Tech – 30.5%

Equal, 1:1. E
Option
D
Option
C New firm - Baldster
Option
Equal sharing of cash, assets,
B Production vs Capacity debts
Option
Baldwin: 3763 v 2400
A Joint Market share price Chester: 3756 v 2700
Option
582.02
In 000s Baldwin Chester
Sales 1,12,575 1,39,607
Total Variable Costs (Labor, Material, Carry) 80,822 1,01,647
Direct Material 32,850 51,058
Direct Labor 43,650 48,468
Inventory Carry 4,322 2,120
Other (Fees/Write-offs/Bonuses/Relocation Fee) - 480
Total Period Costs 13,893 17,836
Interest (Short term/Long Term) - 3,634
Taxes 6,251 5,604
Profit Sharing 232 208
Net Profit 11,377 10,199
Tax Rate 35.0% 35.0%

In 000s Baldwin Chester

Current Assets 50,939 1,44,519
Cash 5,670 1,15,374
Fixed Assets 21,480 33,591
Total Assets 72,419 1,78,110
Current Liabilities 7,980 8,358
Long-Term Liabilities - 38,000
Total Liabilities 7,980 46,358
Total Equity 64,439 1,31,751
Total Liabilities & Equity 72,419 1,78,110

  Baldwin Chester
Contribution Margin 28.21% 27.19%
Stock Price 59.11 56.71
Market Share 15.10% 18.70%
Terms of the Merger - Baldster

Top Management Payment of 60% of Debt

Rearrangement, 100% within 1 year
Employee Retention 60% of 38000 would be paid
in order to reduce interest
costs as well

Assets and Liabilities Listed as Baldster

shared
One entity sharing total Baldwin shareholders will get
Assets and Total Liabilities shares equivalent to their
value held
  Baldwin Chester Cost Basis Synergy
Contribution Margin 28.21% 27.19%
Total Cash 1,21,044.00
Stock Price 59.11 56.71
Market Share 15.10% 18.70% Expenses 41,634.00
Commission(10%) 7941.00
Market Cap 11,82,18,325 18,85,86,140
Total Cash 71,469.00
Cash (in 000s) 5,670 1,15,374 Percentage 59%

Nos of shares 19,99,972 33,25,448

Baldster Round 8 Round 8 Round 9
PE 10.4 18.5 Consolidated Income Stmt (in 000s) Pre Merger Post Merger Post Merger
EPS 5.7 3.1 Revenue 1,12,575 2,52,182 2,92,413
Contribution margin 28.21% 28.21% 45%
Premerger weighted avg PE 15.37  
Gross Profit 31,757 71,141 1,31,195
Enterprise Value 11,25,48,325 11,12,12,140
Contribution 101.20% 98.81% Fixed Costs 13,893 35,843 14,680
Payment (in 000s) 1,12,548 1,11,212 PBT 17,864 35,298 1,16,515

Tax 6,253 12,354 40,780

In 000s   Net Profit 11,612 22,943 75,735

Net Profit without synergy 1,12,575

Net Profit with synergy 2,52,182

  Mkt Share Units Price/unit Revenue
Synergy Gain 1,39,607
Synergy Gain% 124.0% Low Tech 34.3% 11,884 35.00 1,42,839
Share price 582.02 High Tech 30.5% 11,146 44.00 1,49,574
EPS 37.9
EPS Gain 565.7%
 Key Learning
R&D
- Apt age was 0, Performance and size had the
highest weightage and needs to be revised every
01
round to customer preference

Marketing

02 Price had the highest weightage for low tech sector

and sales and promo budget helped to maximize
customer awareness, accessibility and satisfaction

Production
The most important aspect is the setting of forecast for
each product depending upon market demand, capacity
03
in automation made a marked difference with respect to
cost optimization

Finance

04 Keeping in line with our debt free status we found

the current debt instrument to be the most efficient
and useful to maintain our working capital
Industry Competitive Dynamics

Diversified
products in Low
tech as well as
Highest high tech based
Production on perception
2nd Highest
Capacity post map staistics
Player after
Merger
Digby for Low Lowest Material
tech segment cost in low tech
Highest Market segment, to
Player for high achieve higher
tech segment contribution
with 30.6% margin
share
 Reflection of our Journey
Clear Objective and Strategy before
beginning Simulation – Vision and Mission

Consistently analyze contribution margin

after every Round and R&D, marketing
expenditure

Invest in Automation in early stages

especially for low end products

Borrow short term to increase and have a

healthy cash position at end of each year

Do a thorough competitive analysis before

each round and strike the right balance
between sales and promo budget for each
products