Eskimo Pie Writeup
Eskimo Pie Corporation
Eskimo Pie: IPO Vs. Buyout
1991
Student Report
Prepared on 03/29/2015, by:
Parker Scott – u0866636
Eskimo Pie Corporation
Eskimo Pie: IPO vs. Buyout
1991
EXECUTIVE SUMMARY
In early 1991, Reynolds Metals Company had a decision to make. Goldman Sachs investment bank has facilitated a potential acquisition of Reynolds’ subsidiary, Eskimo Pie to Nestle Corporation. Throughout the years, Eskimo Pie has been independently operated and this acquisition would consolidate the business under the Nestle brand name. Mr. Reynolds, the operating shareholder of Eskimo Pie has been offered 61 million dollars for the corporation, however there are other routes Mr. Reynolds could pursue. Wheat First Securities, and a small group of Eskimo Pie’s management proposed an Initial Public Offering of Eskimo Pie’s shares.
Based on my analysis, I found that the current offer of a $61 Million dollar buyout of Eskimo Pie by Nestle would not be beneficial to Reynolds Metals. Through my calculations I found that Nestle has under-valued Eskimo Pie Corporation at around 95 Million Dollars. If Eskimo Pie corporation were to IPO, they could attain anywhere from 63-68 million dollars for their equity shares. Looking at the lower level offer that Nestle presented, I conclude that the company isn’t attributing enough value to synergies they would gain from the acquisition. Based on my analysis, I recommend the proposed IPO to Mr. Reynolds if Nestle will be unable to heighten their buyout price.
RECOMMENDATIONS:
1. Counter the Nestle offer and provide rational and reasons for why the company should extend their bid price
2. If Nestle is unable to increase their offering price, Pursue an IPO for Eskimo Pie Corporation
Eskimo Pie Corporation
Eskimo Pie: IPO vs. Buyout
1991
I. INTRODUCTION
Company Objectives
Reynolds Metals acquired Eskimo Pie in 1924, when the company fell into financial distress. Reynolds Metals became involved in Eskimo Pie because they
Eskimo Pie: IPO Vs. Buyout
1991
Student Report
Prepared on 03/29/2015, by:
Parker Scott – u0866636
Eskimo Pie Corporation
Eskimo Pie: IPO vs. Buyout
1991
EXECUTIVE SUMMARY
In early 1991, Reynolds Metals Company had a decision to make. Goldman Sachs investment bank has facilitated a potential acquisition of Reynolds’ subsidiary, Eskimo Pie to Nestle Corporation. Throughout the years, Eskimo Pie has been independently operated and this acquisition would consolidate the business under the Nestle brand name. Mr. Reynolds, the operating shareholder of Eskimo Pie has been offered 61 million dollars for the corporation, however there are other routes Mr. Reynolds could pursue. Wheat First Securities, and a small group of Eskimo Pie’s management proposed an Initial Public Offering of Eskimo Pie’s shares.
Based on my analysis, I found that the current offer of a $61 Million dollar buyout of Eskimo Pie by Nestle would not be beneficial to Reynolds Metals. Through my calculations I found that Nestle has under-valued Eskimo Pie Corporation at around 95 Million Dollars. If Eskimo Pie corporation were to IPO, they could attain anywhere from 63-68 million dollars for their equity shares. Looking at the lower level offer that Nestle presented, I conclude that the company isn’t attributing enough value to synergies they would gain from the acquisition. Based on my analysis, I recommend the proposed IPO to Mr. Reynolds if Nestle will be unable to heighten their buyout price.
RECOMMENDATIONS:
1. Counter the Nestle offer and provide rational and reasons for why the company should extend their bid price
2. If Nestle is unable to increase their offering price, Pursue an IPO for Eskimo Pie Corporation
Eskimo Pie Corporation
Eskimo Pie: IPO vs. Buyout
1991
I. INTRODUCTION
Company Objectives
Reynolds Metals acquired Eskimo Pie in 1924, when the company fell into financial distress. Reynolds Metals became involved in Eskimo Pie because they