Case Studies

Case Studies

Ayala Corp.
Authors: Belen Villalonga, Raphael Amit, Chris Hartman

Ayala Corporation is the oldest conglomerate in the Philippines and has been controlled by the Zobel de Ayala family for seven generations. Over the past 25 years, Ayala has evolved from a real estate family business into a highly diversified and professionally managed business group, with a significant number of non-family shareholders. Between the holding company and its four largest subsidiaries, the Ayala group accounts for a quarter of the market capitalization of the Philippines Stock Exchange. Provides data to assess the value created for Ayala's stockholders in the ten years leading up to 2006, when the transition to the seventh generation of the Zobel de Ayala family culminated.

Learning Objective: To investigate the unusual corporate structure, with both the family holding company and its subsidiaries being publicly traded, of Ayala Corp. Offers a unique opportunity to measure and discuss the value implications of corporate diversification for family and non-family shareholders. Facilitates a discussion of the issues associated with publicly traded family firms.

For more information or to buy this case visit: http://cb.hbsp.harvard.edu/cb/product/207041-PDF-ENG

 

 

SUN Brewing (A)
Authors: Raphael Amit and Belen Villalonga

The Khemka family of India--founders, managers, and majority owners of Russia-based SUN Brewing. The family is debating the merits of two main alternatives: To bring in a major global beer company as a strategic partner at this difficult time or to stay on as controlling owners, inject millions of dollars into the company from other parts of the family business group, and weather the storm until better terms can be expected from any outside provider.

Learning Objective: To highlight the role that family business groups can play as internal capital markets, particularly in emerging economies, where external capital markets are inefficient. Illustrate the risks of entrepreneurship in emerging markets.

For more information or to buy this case visit: http://cb.hbsp.harvard.edu/cb/product/207022-PDF-ENG

 

 

SUN Brewing (B)
Authors: Raphael Amit and Belen Villalonga

In July 2004, Shiv, Nand, and Uday Khemka are discussing their holdings in SUN Interbrew, a leading Russian beer producer that is part of the family's global portfolio of businesses. SUN Interbrew has been operating as a joint venture since 1998, when the Khemka family, who founded its predecessor company SUN Brewing in the early 1990s, decided to partner with Belgian beer giant Interbrew to survive the Russian financial and economic crises. Since then, the family has used Interbrew's capital and beer industry know-how to successfully grow the business. Now several developments prompt the Khemka family to consider a liquidity event. The family's five-year lock-up arrangement with Interbrew has just expired. In March 2004, Interbrew has announced its plans to take a controlling stake in Brazilian giant AmBev, a deal that will create the world's largest brewer. In addition, the Alfa Group, a Russian conglomerate that has become the third largest shareholder in SUN Interbrew, has announced its intention to take part in the company's management and attain a leading position in the Russian beer market. Is there a role for the Khemka family in the future of this company? Should they maintain some stake in the company and continue to participate in its management? Should they auction off their shares to the highest bidder and exit? Or should they play a role in the global beer industry through a stock-for-stock sale to InBev, and if so, at what price?

Learning Objective:
The decision the Khemka family have to make calls for a financial valuation of the company, which the case provides the necessary data to perform using DCF, trading multiples (comparable companies), and transaction multiples. The company's dual-class stock structure, including a voting and a non-voting class that are both publicly traded, facilitates the computation of a voting premium and the estimation of the value of a vote. Can be used to discuss the drivers of this premium and its effect on the valuation of the family's cash flow and control rights. Can be taught as a sequel to SUN Brewing (A) or as a stand-alone case.

For more information or to buy this case visit: http://cb.hbsp.harvard.edu/cb/product/207039-PDF-ENG

 

 

Medco Energi Internasional
Authors: Raphael Amit, Belen Villalonga, Chris Hartman

In late 2004, Hilmi Panigoro, CEO of the publicly traded Indonesian oil company Medco Energi Internasional, is striving to regain majority control of the company his brother Arifin founded in 1980.

Learning Objective: To expose students to different capital restructuring transaction available to family firms, including leveraged buyouts and equity offerings, in a turbulent emerging markets setting. Students are required to evaluate the benefits and risks of the proposed financing plan from the perspective of both the controlling family and minority shareholders.

For more information or to buy this case visit: http://cb.hbsp.harvard.edu/cb/product/207021-PDF-ENG

 

 

Kohler Co. (A)
Authors: Raphael Amit, Belen Villalonga

Kohler Co., best known for its plumbing fixtures, is a large, private family firm. In April 2000, Herbert V. Kohler, Jr., chairman and CEO, has to decide whether to settle with the dissenters and, if so, at what share price. Students must identify and understand the different valuation assumptions that can lead to a wide range in price, including the applicability of discounts for lack of marketability and lack of control.

Learning Objective: To examine the valuation of privately held firms from the perspectives of the controlling shareholder(s) and minority shareholders.

For more information or to buy this case visit: http://cb.hbsp.harvard.edu/cb/product/205034-PDF-ENG

 

Kohler Co. (B)
Authors: Raphael Amit, Belen Villalonga

Supplement to the (A) Case.

For more information or to buy this case visit: http://cb.hbsp.harvard.edu/cb/product/207025-PDF-ENG