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Global Financial Markets Assignment

   

Added on  2020-10-04

15 Pages2708 Words233 Views
GLOBAL FINANCIALMARKETS

TABLE OF CONTENTSINTRODUCTION...........................................................................................................................4Analysis of Acquisition event.....................................................................................................4Valuation of both organization (Reynolds American Plc. and British American Tobacco Plc.)5Efficient market Hypothesis........................................................................................................91. Representing charts for event with application of various technical indicators for gauge ofmarket reaction............................................................................................................................92. Discussing efficient Market hypothesis theory.....................................................................143. Discussing technical analysis................................................................................................15CONCLUSION..............................................................................................................................16REFERENCES..............................................................................................................................17

INTRODUCTIONFinancial markets is playing very important role in global picture. The present report isgiving brief discussion of merger of British American tobacco and Reynolds American Inc.Analysis of Acquisition eventBritish American Tobacco Plc had proposed for acquiring 5738% of Reynolds AmericanInc which was not owned on prior basis. There specific aim was to provide products of nextgeneration as along with this it had also acquired a UK e-cigarette organization as Ten Motives.There main motive is to become fast and world's biggest tobacco company in mainstream of itsbusiness. By the approval of both shareholders, as British American Tobacco had directly backmarket of US as it created absence from past 12 year. The objective of this merger is to raisedevelopment of vapes and e- cigarettes. There is presence of agreement which had been established for holding of new publiclyorganization which is Reynolds American Inc. as it has 150 million shares which areoutstanding. There was deal that it would own 42% along with existing shareholders of ReynoldsTobacco along with agreement which would help for transferring all liabilities of masteragreement and simultaneously balance of cash had been recovers on payment obligations of pastwhich had been accrued. In the same series, there was contingent amount on closing thetransaction, but $750 million was average approx in that specific year. The payment of $400would be paid by Reynold American Inc. to British American Tobacco Plc. For all future andexisting litigations related to business of United States. In the same series, this specificcombination would consolidate both second and third largest organization of tobacco in U.S(Reynolds American, 2017). There merger was planned for attaining strategic ambitions for long term perspective inU.S. as it had improved cash flow along with earning per share for fulfilling completion of 1styear. The Reynold American Plc had continued paying dividend of $3.80 which is annualized.The merged organization had Board of 5 directors from British American Tobacco Plc and 6from Reynold American plc. According to its recommendation there would be the annualdividend through payout policy of net income of 75% and at end of practical implications ofownership of 42% which is directly included by BAT for substantial repurchase agreement ofshare along with programs by Reynolds American Inc.Feature of primary transactionAcquisition of stake of equity

Date of Announcement21/10/16Date of applying bid20/10/16Agreement definitive date16/01/17Closed date25/07/17Participants of Sell sideIndustryHeadquartersReynolds American Inc.TobaccoUnited StatesParticipants of Buy sideBritish American Tobacco plcValuation of both organization (Reynolds American Plc. and British American Tobacco Plc.)MultiplesBritish American Tobacco Inc.Valuation Multiples based on Current CapitalizationFiscal Period12 monthsDec-31-2015ALTM12 monthsJun-30-2016A12 monthsDec-31-2016E12 monthsDec-31-2017E12 monthsDec-31-2018ETotal EnterpriseValue /Total Revenue8.1x8.2x7.38x6.59x6.09xTotal EnterpriseValue /EBITDA16.2x15.3x18.72x16.69x15.70xReynolds American PlcValuation Multiples based on Current CapitalizationFor the Fiscal PeriodEnding12 monthsDec-31-2015ALTM12 monthsSep-30-2016A12 monthsDec-31-2016E12 monthsDec-31-2017E12 monthsDec-31-2018ETotal EnterpriseValue/Total Revenue9.4x7.8x7.77x7.47x7.18xTotal EnterpriseValue /EBITDA23.8x17.3x16.25x15.19x14.40x

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