Lion Capital and Blackstone Essay

Question 1 Why would king of beasts do a deal with Blackstone? Why would Blackstone do onewith Lion? What does apiece risk? What lot each gain?Lion and Blackstone atomic number 18 fall in to exhausther to leverage industry expertise and financing tycoon.Lion has a strong dateing of consumer-focused brands and using proprietary deals to turn an existing medium-sized pretender into a voluminousr busines by using it as a political platform for acquisitions. Examples of much(prenominal) deals include Weetabix and Jimmy Choo.Blackstone has the power to bring very large financing into a deal, capable of investing up to $1 jillion in a company, while alike having an international presence, bringing synergies crossways borders.However, this partnership also brings in a lagging pace in closing deals and public visibility and scrutiny.Lion typically moves quickly on deals, and already has decided ahead of Blackstone on timing and price. Blackstone, however, still inescapably to conduct due diligence and have the deal reviewed by the enthronisation committee.Moreover, Lions partnership with Blackstone brings it into the Financial Times confront foliate and pressures it further to perform.Question 2 Is Orangina a unassailable deal? It seems that Lion and Blackstone argon paying a pretty full price what topple might the Blackstone-Lion consortium have found to justify it?Yes, Orangina is a good deal, for its brand power, its resilience, its financing-friendly nature, and its operating and distribution network in France and Spain.Orangina has iconic brands that ar well known in France and Spain, and it commands a strong presence in its niche without intruding on the soft drink space of brands much(prenominal) as Coca Cola.It can be levered easily, as it is in a defensive sector, has strong cash fly the coops, and with tangible assets that can be claimed. in spite of being undermanaged, it continued to perform well in bad times, indicating that it has a working operating infrastructure and does not depend on a personality to guide the business.Moreover, the squad has a good understanding and apparel with the company. Javier Ferrn of Lion, a Spanish national who speaks French, is well suited to understand a company with operations concentrated in Spain and France, and is also lofty for his past experience in the soft drinks sector.Question 3 ground on the information provided in the case, how would you leverOrangina?We will NOT value the company based on any discount cash flow model, including LBO valuation or APV model, as we are dealing with a semiprivate company, whose beta and future capital structure are unfeasible to estimate. snobby companies have no estimable beta, since they are not publicly traded and are illiquid their value does not move in any direction with look upon to the market. There are also no strong barriers to entry in a soft drink market, so terminal growth also cant be easily estimated.However, we c an first guarantee a simple Venture Capital valuation model to get a quick ballpark for our valuation.We find that a reasonable honor valuation for a private equity buyer lies between $900 cardinal and $1.9 billion.This implies an equity valuation between 760 million euros and 1.6 billion euros.With plans to place 900 million euros of debt, Orangina can be priced at 1.7 billion euros to 2.5 billion euros. We can impress that the 1.85 billion euro valuation of Blackstone and Lion is quite reasonable.Question 4 What is the beat out deal approach?The team needs to make a turn that will make them one of the trusted and approved buyer candidates immediately, nevertheless with the risk of overpaying.They need to become one of the groups with access to the Orangina management team and their advisors, and begin asking the questions they need answered on the company such as the implementation of a stable management team in a time of a high management turnover, the ability to grow in the food channel or obtain higher bidding power in the out of food channel, and a turnaround strategy for France. given(p) that Blackstone and Lion have a special edge that Lions team understands the sector, the business, and the geography well, they should be willing to pay up front in the early auctions, so that they can eliminate strategic buyers such as Pepsi, while also discouraging other financial buyers who dresst have the same level of understanding, edge, or angle onthis sector.Once the likelihood of a deal is strong enough, Blackstone and Lion can begin negotiating a definitive merger agreement with prices and terms that are a bit more suitable and fair for it. However, the current precedency should be to get into the buy and cut others out as before long as possible.