Mergers and acquisitions

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Presentation transcript:

Mergers and acquisitions Mergers and Acquisition deals M&A Mergers and acquisitions Operative motives Financial motives Strategic motives Advantages on capital markets Profitable purchase of assets Economy of scale Tax benefits Growth of market power Access to insider stock tips Possibility of subsequent resale Sale of recurrent assets Economy of vertical integration Risk diversification

XYZ XYZ DEAL AFTER DEAL Principle of LBO Investor Investor Shareholders Debt $140 100% $200 100% Debt pass $200 XYZ XYZ Investor $200 $60 Equity Capital dynamics Exit yield EV=$200 mln EV=$270 mln Changed company management Decreased costs Increased operating efficiency Stable loan payments Exit EV (-)Exit debt Shareholders` exit equity (-)Shareholders` entry equity Profit: IRR $270 mln ($100 mln) $170 mln ($60 mln) $110 mln 41,5% CAGR=10% Debt Equity Figure 2 – Capital structure changing during LBO

Wind Telecom 7 377 antenna tower stations Object of the deal: structure of revenue Wind Telecom 7 377 antenna tower stations Rent payment from Wind Revenue from other renters Fixed price for installed equipment One-off payment for each new installation Quantity of installed equipment Price for each piece installed equipment Fixed payment from Abertis as a compensation Quantity of ATS * 20 300 euro Quantity of new installations*11 500 euro Quantity АTS * 2850 euro Number of equipment* 11500 euro Revenue from the compensation payments Figure 1 – Revenue structure

Expected revenue calculation Figure 5 – Structure of revenue in 2016 Figure 4 – Revenue dynamics Figure 6 – Structure of revenue in 2031

IRR>50% Analysis of LBO deal for Abertis 518 635 749 Table 2 – Analysis of LBO deal for Abertis IRR>50% Entry information Costs, million euros Interest   Debt 350 1,50% Exit debt (1,5%) 284 300 2,00% Exit debt (2%) 234 Equity 43 7,00% 749 Total sum of investments 693 EV 1266 1 266 518 Debt 635 749 Equity 43 Entry Exit Figure 10 – Exit data of Abertis High yield because of LBO 1266 million euros after completion of the deal Opportunity for VimpelCom to increase the deal price