Merger Analysis: Say Logidis (Mauritius) Ltd - Business Valuation

The report provides an executive summary of Say Logidis (Mauritius) Ltd, a warehousing and transport company based in Mauritius, which is considering a merger. It details the company's services, financial performance, and reasons for the merger, including a need for capital and the increasing competition. The report analyzes key financial ratios such as liquidity, profitability, and solvency, highlighting the company's strengths and weaknesses. It also discusses the merger process, valuation methods, and legal considerations. The analysis suggests that a merger could benefit both Say Logidis and the acquiring company by expanding market share, optimizing operations, and achieving sustainable growth. The report emphasizes the importance of assessing the company's financials and aligning merger goals for a successful outcome, while also touching upon the legal and negotiation aspects of the M&A process.

SAY LOGIDIS
(MAURITIUS) LTD IS
FOR SALE

EXECUTIVE SUMMARY
To the Investors
Say Logidis is a Warehousing & Transport Company which offer all activities related to
Logistic Trading such as redesigning & restructuring warehouse and distribution of goods at
Islands. Company is also making investment in equipments related to Information Technology.
Logidis is including many services in its portfolio as services provided by company is
attracting customers and company is also delivering to corporate customers which in turn helps
company in enhancing its profitability & market share. Further, firm is also made expansion in
its business operations by adding transport services in its business. Logidis Transport Services is
providing facilities related to transport. Moreover, this business Group is also entering in to
business of Hotel Industry. All the departments & subsidiary of Logidis are profitable and
customers are highly satisfied with products & services offered by company.
Merger is a method of restructuring in which two more companies come together and
take a decision of combining their business so that they can reduces competition in market and
achieve more profits. There are various types of merger such as Conglomerate Merger,
Horizontal Merger and Vertical Merger.
Say Logidis is a Mauritius based company and now company is thinking to sale its
business to any other company by entering in to a Merger. Merger & Acquisition is an activity
through corporates are able to buy & sell their business to other company. Companies grow their
business organically & inorganically, merger is an activity through which an organisation is able
to grow its business in inorganic manner. Companies enter in to Merger & Acquisition Activities
with an objective of making expansion & diversification in their business offerings. Say Logidis
is also wanted to expand its business offering & market share that's the reason company is
thinking to enter into a merger contract. Further, in a merger two or more companies combine
together and having control on business operations equally or in a proportion mutually decided
by them.
Say Logidis wants to enter in to a one sided merger where whole shares and control of
company is to be taken by other company. Merger is also beneficial for purchasing company as a
business firm is required to pay less cost & has to invest less money if it purchases an existing
business. Whereas, if a company establishes a whole new undertaking than there is a requirement

of huge cost and it also requires more time to in developing business ideas & formulating
business strategies. Thus, it is beneficial for a purchasing company to enter in to a merger
contract. Merger also benefits purchasing company by providing Inorganic Growth.
Market Share, Customer Base and Brand Image of a purchasing company gets maximised
if it enters in a merger with another company. Any company can purchase business of Say
Logidis by paying consideration to company. This consideration can be made either in cash, by
issue of shares and by calculating assets & liabilities of Say Logidis.
Financial Information of Say Logidis
For the year ended 2018
Particulars Amount
Debtors 7780260
Current Assets 1845878
Current Liabilities 14952871
Net Profit 2382872
Sales 37074403
Gross Profit 10650292
Capital Employed 44122960
Key Financial Ratios of Say Logidis
For the year ended 2018
Particulars Amount
Liquidity Ratio
Current Ratio 0.1234463937
Profitability Ratio
Earning before Interest & Taxes 2731775
Net Profit Ratio 6.4272700494
Gross Profit Ratio 28.7268064708
Earning Per Share 2.22

Return on Capital Employed 0.0619127774
Solvency Ratio
Debtor Collection Period 76.5971848555
Before, entering in to a merger purchasing company is required to evaluate financial
performance of Say Logidis as company is making profits or not. Further, it is also essential for
purchaser to assess feasibility of business to make decision of purchasing business of Say
Logidis Plc. Thus, after analysing different key ratios of company it is analysed that performance
of company is profitable and it is having large number of customer base & market share.
Further, from above table it is analysed that Liquidity of Say Logidis Plc is not good but
company is able to generate sales & attract customer by providing better quality services. It is
also evaluated that liquidity of company is improving and company will pay all its liabilities
before entering in to the contract.
Moreover, Solvency Ratio of company depicts that its trade debtors are taking time of 72
days in making payment of services provided by company on credit. Return on Capital
Employed Ratio of company shows that Say Logidis is making earning a revenue of 6.91% from
its capital invested which is also good and it is beneficial for purchasing company to enhance its
revenue from capital investment.
Profitability Ratio of Say Logidis is also reliable & which add ons to the profitability of
purchasing company. Further, company is earning 2.22 on each share is which double from the
amount of face value. Companies business is in profits as it is earning profit of 2382872 rupees
during the year 2018 and its earning before interest & taxes are also positives thus, it is an
opportunity for purchasing company to enhances its business operations and with that purchasing
company can also provide more services to customer which in turn maximises customer base.
Financial Statements of Say Logidis is are not showing negative performance of company
thus, it is an appropriate decision for any company and it will contribute towards sustainable
growth of a company.
Before, merger Current Liabilities such as Account Payable and other expenses & current
liabilities such as Inventory, Cash, account receivables and other prepaid expenses are also
required to be assessed & evaluated by purchasing company. Current Ratio is the best element

through which liquidity of a business organisation is assessed and a company can take
purchasing decision on that basis(Abbott and Adya, 2016).
Say Logidis is a preparing all its financial statements after adapting generally accepted
accounting principles. Thus, all the ratios discussed above are giving true & fair value of
company and this ratios are not showing decreasing trend as it add on to the profitability &
Brand Image of Purchasing Company.
Reason for Merger
A company want to enter in to a merger in a situation of retirement and if owners of
business organisation thinks that they are not able to invest more money in this business than
they make decision of selling of their business to another company. Owners of Say Logidis are
not having enough capital ti invest in its business and if company does not make expansion in its
business than its business will be in loss in future thus, it is essential for company to sales its
business to other.
Say Logidis Plc needed funds for operating its business that is the only reason company
is selling its business other wise business of company is feasible and it is able to generate profits
from its operations & services. Say Logistic is a division of IBL Group and as this division
require more amount of investment decision of merging this company with any other company is
taken. Thus, it is a Divesting Decision.
Decision for Merger
Say Logidis made decision related to merger as number of competitors in market for this
company are increasing and its difficult for business firm to compete with companies operating
with same industry as Say Logidis. Further, company is note having sufficient capital to modify
& changes its business operations with the changing trends. Moreover, use of technology is
increasing in logistic business and which require huge amount of investment.
Human Resources such as managers, employees and other workers are also required to
run business of a company. Financials of Say Logidis are good but company is not having
talented & skilled workforce which slow downs performance of business activities provided by
company thus, if any other company acquire business of Say Logidis Plc than profitability &
operations of that company will be improves as requirements of both the companies will be
fulfilled and that also contributes towards organic growth of purchasing company.
The Company is in Trouble

Say Logidis is not able to offer its products & services in accordance with customers
demand thus, it is difficult for company to maximise its sales volume. Quality of products &
services offered by Say Logidis Plc is good but it is unable to sale its products & services
according to changing trend due to this it is proposing other companies for the purchase of its
business. Chief Financial Officer of Say Logidis prepare a Balance Sheet for the purpose of sales
of its business.
Legal Issues- Say Logidis is following all the legal rules & provisions applicable on
business of company. All the taxes are cleared by company and it is operating its business after
adapting guidelines provided in Companies Act. No criminal investigation & lawsuit are pending
against the company thus, it is also beneficial for purchasing company. Further, business of
company is credible and reliable. This also helps purchasing company by attracting its
customers.
An acquirer of Say Logidis can directly purchase sales volume, customer, profits, market
share and other growth elements of Say Logidis by giving a consideration. Consideration of this
merger will be decided on the basis of value of assets & liabilities of company and value of
goodwill of selling company.
Further, Earning per Share & Capital Employed of purchasing company also gets
maximised if it acquire business of an existing business firm. With the increase in Earning Per
Share Investment in shares of purchasing companies share also gets maximised as shareholders
show their interest in purchase of companies shares. This in turn enhances Value of owners
capital of Purchasing company.
An increase in profitability of purchasing company enable it in introducing more
products in its product portfolio. Moreover, a company which is offering similar business
related to Say Logidis is able to offer many products thus, merger of this company with a
Warehousing & logistic company is more beneficial than any other company operating business
in different Industry(Toda and Kameyama, Hamamatsu Photonics KK, 2019.).
Market of purchasing company will also grow if it purchase business of Say Logidis. For
Example- Say Logidis is offering its services in Mauritius and purchasing company is operating
its business in any other country than purchasing company is now able to offer its products in
market of Mauritius also.

There are no changes in Fixed expense incurred by purchasing company and company
can earn more revenue from that cost. Thus, there is an advantage with purchasing company of
Economies of Scale if it purchase business of Say Logidis. Say Logidis is a largest Logistic
company of Mauritius and if company merge its business with other company than there is less
competition.
It is recommended to Acquirer company to make decisions and involve all its managers
& directors in decision making of acquiring business of Say Logidis. Purchasing company also
having an option of buying business of Say Logidis by Private Equity Fund according to this
company can resale its business when selling company is having sufficient capital. This is
beneficial for Acquiree and Acquirer company to make money and operate their business
successfully.
It is also suggested to purchasing company to evaluate their goals & objectives and after
that make a decision related to purchase business. If goals and objectives are not linked with
operations of business Say Logidis than in that case this merger is not beneficial for that
company(Abbott and Adya, 2016).
Process of Merger & Acquisition
Negotiation Method is adapted by Say Logidis in this Merger & Acquisition Process.
Further, both the companies (Acquirer and Acquiree) are required to follow whole process of
merger & acquisition. Process of M&A includes identification of buyers & sellers,
determination of consideration and adaption of leagal formalities.
Valuation of the assets of Say Logidis (Mauritius) Ltd:
The company Say Logidis (Mauritius) Ltd is up for sale and the valuation its ass is based
on the asset value thesis instead of generating the valuation of the asset on the basis of cash flow
measures. With valuing the assets of Say Logidis (Mauritius) Ltd on the asset value thesis the
buyer will be presented with certain cost and valuation benefits. With the value of the company
Say Logidis (Mauritius) Ltd can be created in another way which presents very thin profits and
losses. With the use of asset value thesis the seller is not required to use the depreciated value of
the assets but for this the replacement value cost of the asset is taken into account. This means
there is no consideration of the book value of the asset presented in the balance sheet of the
company rather the market value of the asset is considered which is the actual value for the
replacing the old asset. Apart from this the accumulated depreciation on the assets will be shown

in the asset of the company Say Logidis (Mauritius) Ltd. This means the actual value of asset
will be reached by assifng the depreciation value and the replacement cost which will present the
real and actual cost of the asset. The seller Say Logidis (Mauritius) Ltd can adds back or carry
out some research for determining the replacement value of the assets. This is notable that if the
potential buyer are Chinese than this method must be followed to value the asset Chinese buyers
rarely look at cash flow as a valuation technique and instead
prefer asset value.
Financial projections
The financial projection by the seller that is the seller is offering a document which
present the financial projects for last 5 years. The projection clearly includes the narrative
explantation of the assumptions which the company Say Logidis (Mauritius) Ltd have used in
its practices and the reason for creation of them. This means all the assumption taken into
account are presented with a clear explanation over how, and why they are created and the
manner in which they were used. Such as the seller Say Logidis (Mauritius) Ltd is required to
explain the reason and present a relational over the increaser in the revenues and how the
expenses related to those revenues are handled. The reason for rise in the revenue must be
explained. This is a important projection by the company Say Logidis (Mauritius) over the
matters related to beeter projection of the low growth and beat that the projection than to
project paid rapid growth and fall short. This means the financial projection of the company Say
Logidis (Mauritius) must present slow and steady growth tin order to depict a clear picture of the
organisation and without involving in any window dressing of the company's financial position
as well as growth and profits of the Say Logidis (Mauritius).
Thank You

REFERENCES
Books and journal
Kim, Y.B. and Lee, J.H., Samsung Electronics Co Ltd, 2017. Method and apparatus for
system information acqusition in wireless communication system. U.S. Patent
Application 15/270,636.
Toda, E. and Kameyama, T., Hamamatsu Photonics KK, 2019. Image acqusition device, and
imaging device. U.S. Patent Application 16/149,642.
Korauš, A., Štefko, R. and Dobrovič, J., 2015, June. Acqusition activity in financial sector.
In European Financial Systems 2015: Proceedings of the 12th International Scientific
Conference (pp. 277-286).
Abbott, B.P. and Adya, V.B., 2016. Observation of gravitational waves from a binary black hole
merger. Physical review letters, 116(6). p.061102.