VALUATION AND ACQUSITION

VALUATION AND ACQUISITION OF “TARGET COMPANY” LIMITED BY “INVESTOR” LIMITED

BY: AKINTOYE AKINDELE
DBA PROGRAM
INTERNATIONAL SCHOOL OF MANAGEMENT
DECEMBER 2011

INTRODUCTION
CONTEXT
This report reviews the investment/acquisition rationale, valuation (assumptions and methodology), negotiation and post acquisition events of the acquisition of 100 percent of the equity of “Target Company” limited by “Investor” Limited. While the names of acquiring and selling companies have been changed to Investor Limited and Target Company limited respectively for confidential reasons, the information and events here are factual and all the exhibits represent actual financial information of both companies especially Target Limited.
BACKGROUND & BUSINESS OVERVIEW OF TARGET
Target Limited is an aluminium continuous casting and cold rolling mill located in Ghana. The company was set up to implement the fourth processing leg of the proposed integrated aluminium industry for Ghana which comprised; bauxite mining – First leg, refining bauxite into alumina – Second leg, smelting alumina into raw aluminium ingots – Third leg and processing the ingots into flat rolled product – Fourth leg and Target’s business.
The company was incorporated as a private company and granted license to commence business on 24th February, 1978 and 22nd March, 1978 respectively. Target was later converted into a public company on 28th May, 1996 and was listed on the Ghana Stock Exchange on the 29th November, 1996. The plant initially commenced operations at a capacity of 10,000 MT and was expanded to 20,000 MT in 1992 and to 30,000 MT by 2002. The company currently operates with a workforce of about 260 staff.
Target is the premier flat-rolled aluminium manufacturing company in West Africa and principally seeks to meet the aluminium requirements of the sub-region.