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Str ate gic Re por t Da mila re Ab dula i Za ina b Olo wo la g - PowerPoint PPT Presentation

May 22, 2023 •192 likes •308 views

Str ate gic Re por t Da mila re Ab dula i Za ina b Olo wo la g b a Ove rc o me r F a sa n AB INBEV ISSUES PRIORITISATION FINANCIAL ETHICAL RISK STAKEHOLDERS URGENCY SCENARIO IMPACT PRIORITY EFFECT EFFECT INVOLVED IMPLICATION

  1. Str ate gic Re por t Da mila re Ab dula i Za ina b Olo wo la g b a Ove rc o me r F a sa n

  2. AB INBEV ISSUES PRIORITISATION FINANCIAL ETHICAL RISK STAKEHOLDERS’ URGENCY SCENARIO IMPACT PRIORITY EFFECT EFFECT INVOLVED IMPLICATION Integration, Synergies and 1 Execution Risk Deal Funding Strategy 2 and Group Financial Performance Africa Direct Entry 3 via Nigeria B2B and Downstream 4 Supply chain strategy Key: Very high- High- Moderate- Low- SWOT ANALYSIS AND PESTEL MODEL 2

  3. PRIORITY 1 :- INTREGRATION, SYNERGIES AND EXECUTION RISK  Syne rgie s • Co st syne rg ie s: US$2.45b / a nnum • Re ve nue Syne rg ie s: US$ 210m/ a nnum  Ac hie ving the e xpe c te d syne rgie s within four ye ars • SPI = 0.84 • T SPI =1.16  Ove rpric e d SAB Mille rs Ac quisition de al • E xc e ss o f $11.3b • Pre se nt va lue o f syne rg ie s- $14.19b  F inanc ial Re porting Standards applic able : • Disc lo se the a c q uisitio n- I AS10 • Disc lo se the c o st sa ving s o f $448m- I AS37 Re c omme ndations: 1.Ac q uire SAB Mille r in o rde r to re a lise the syne rg ie s 2.AB I nBe v sho uld inc re a se the ir c o st e ffic ie nc ie s b y 16% 3

  4. PRIORITY 2 :- DEAL FUNDING STRATEGY AND GROUP FINANCIAL PERFORMANCE • The best mix of Equity and Debt for financing the Purchase Consideration • Issue 670,880,270 shares at US$111 per share = US$74,467.71m Re c omme ndations A. • Debt = US$31,032.285m 1. Ra ise 85% o f the purc ha se c o nside ra tio n b y issuing e q uity a nd 15% b y issuing • Assessing the likelihood of Insolvency de b t se c uritie s. • Altman Z-score of 2.25 (Likelihood of failure) 2. Do no t use the pre se nt c a sh B. a s pa rt o f purc ha se c o nside ra tio n 3. I mpro ve o n liq uidity po sitio n. • Shar e holde r s’ We alth Maximisation 4. I mpro ve o n Ope ra ting • E c onomic Value Adde d: a c tivitie s. • 2014- US$1003.52m • 2013- US6804.12m C. • NOPATr e duc e d by 31.9% 4

  5. PRIORITY 3 :- AFRICAN DIRECT ENTRY VIA NIGERIA Option1:- Inve st in Option 2:- Do not inve st Cr ite r ion Nig e ria in Nig e ria NPV o f $2876.45 millio n Sunk c o st o f $100.5 millio n CASHF L OWS Be ne fits o f I nve sting in Nig e ria :  A Ne t Pre se nt Va lue o f $2.876b .  Oppo rtunity to b e the ma rke t le a de r in Nig e ria . OUR RE COMME NDAT I ONS: 1. AB I nBe v sho uld ma ke a fo re ig n dire c t inve stme nt in Nig e ria if SAB Mille r a c q uisitio n de a l fa il to c lo se . 2. T he c o mpa ny sho uld upho ld its thre e c o re pilla rs (A g re e ne r wo rld, a c le a ne r wo rld a nd a he a lthie r wo rld). 5

  6. PRIORITY 4 :- B2B AND DOWNSTREAM SUPPLY CHAIN STRATEGY IN SOUTHERN AFRICA F o c us: Re duc tio n o f pro spe c tive Ne wc o c usto me rs’ Ba rg a ining Po we r Ma jo r Po ssib le stra te g ic a c tio ns to c o nside r:  Whic h supe rma rke ts to se ll to b a se d o n fo re c a st pro fita b ility.  Whe the r to ve nture into dire c t re ta iling to c usto me rs. Porters Five Forces Mode l Customers’ Profitability Analysis Net Cash Inflows (%) 6.37 2.6 10.34 Shoprite Pickn'Pay Makro Direct Retailing 80.69 6

  7. PRIORITY 4 :- B2B AND DOWNSTREAM SUPPLY CHAIN STRATEGY IN SOUTHERN AFRICA RE COMME NDAT IONS: 1. Sto p se lling dire c tly to Pic k a nd Pa y 1. Pre fe re nc e sho uld b e g ive n to B2C ma rke ting stra te g y . Supe rma rke t. A ve ry g o o d Ma na g e me nt I nfo rma tio n Syste m sho uld b e 1. Stra te g ic a dvic e sho uld b e g ive n to Sho prite a nd inc o rpo ra te d to re duc e c o st o f c o st g e ne ra ting a c tivitie s 7 Ma kro o n ho w to re duc e c o st g e ne ra ting a c tivitie s.

  8. ETHICAL ISSUE 1 :- ANTI-COMPETITIVE ISSUES Anti- Compe titive Issue s T he Ame ric a n Ac c o unting Asso c ia tio n mo de l, pro viding a lo g ic a l se ve n-ste p pro c e ss fo r de c isio n ma king , ha s b e e n a do pte d to so lving the e thic a l issue s. US$5 million imposition by the South Afr ic an nme nt on Ne wc o gove r T ra de union SAB Mille r ’s c onc e rns on r e te ntion on the JSE downsizing RE COMME NDAT I ONS 1. T he c o mb ine d c o mpa ny sho uld c o o pe ra te with the pa yme nt o f US$5millio n a s re q uire d b y the So uth Afric a n g o ve rnme nt. 2. Ne wc o sho uld ha ve its se c o nda ry listing o n the Jo ha nne sb urg Sto c k E xc ha ng e . 3. I mple me nt the Stra te g ic He a d Co unt Re duc tio n a nd Re tre nc hme nt Pro g ra mme (SHCRRP). 8

  9. ETHICAL ISSUE 2 :- ENVIRONMENTAL HAZARD IN CHINA De o nto lo g ic al Appro ac h (Ac tio ns judg e d b y se nse o f duty)  Ca re le ss dispo sa l o f Building wa ste in a ne a rb y rive r is inc o nsiste nt with the c a te g o ric a l impe ra tive . e le o lo g ic al Appro ac h (Ac tio ns judg e d b y c o nse q ue nc e ) T  Ca re le ss disc a rding o f b uilding wa ste po se s a ha rmful situa tio n to wildlife a nd e q ua lly po llute s the wa te r RE COMME NDAT IONS 1. T a ke the a ppro pria te me a sure s to b ring this a c tio n to a ha lt. 2. E nsure tha t the b uilding ’ s wa ste a re sub se q ue ntly dispo se d pro pe rly. 9

  10. CONCL USION AB InBev should acquire SAB Miller. Finance 85% of the acquisition transaction by raising equity shares and 15% through debt. Invest in Nigeria if only SAB Miller acquisition fails. Preference should be given to B2C marketing strategy. Take adequate actions to discontinue the inappropriate waste disposal in China. 10

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