Asia Investment & Banking Conference 2019 – HSBC M&A Competition Champions (Axe Capital)

FINAL
Asia Investment & Banking Conference 2019 – HSBC M&A Competition
The Kola Company (NYSE:KOLA): Acquiring a company as cheap as a cup of coffee
Amir Hisham
Amy Lui
Hashpal Singh
Katherine Lin
27th August, 2019

FINAL
Key Takeaway :
Executive Summary
Despite facing growth declination in recent times, The Kola Company has a huge opportunity to grow inorganicallyabroad, specifically in India, through acquiring Coffee Day
Enterprises Limited with a starting bid price of $3.23 which reflects a 200% premium on the current share price due to the stock’s recent plummet.
1
Current Situation
Slow Growth Trajectory
Kola Co. is in need of a new growth driver as the soft drinks industry
is expected to flatten out in the coming years. Hence, they are
looking to further venture into the coffee industry.
StrategicApproach
Kola Co.’s declining geographical revenue segments are hindering
the overall company’s growth. Furthermore, the company’s debt
situation only allows for a small scale transaction within the coffee
segment.
Other Considerations
Strategic and Restructuring Plans
Transaction will be followed by a three-phased corporate
restructuring exercise to allow to unlock shareholder value from the
removal of conglomerate discount.
Risks and Mitigation
This transaction faces a number of regulatory, operational and
post-transactional risks which can be mitigated by The Kola
Company’s management team.
Target Overview
Transaction Rationale
Coffee Day is the ideal target for Kola Co. as it fits all our screening
criteria for a target and it also contributes immensely to Kola Co.’s
future growth.
Synergy Realization
Synergies to be realized are estimated at $35.7m and are fully
realized by the Combined Group’s third year of operation.
Majority of the synergies will be derived from revenue
improvements.
Transaction Overview
Valuation Summary
Our recommended starting bid price for Coffee Day Enterprises
Limited is set at $3.23 which reflects a 200% premium to the current
share price.
Pro-FormaInformation
We recommend a 100% Cash funding as it is a small scale
transaction and the board does not want to give up any equity.
Furthermore, the transaction is to be implemented via a Target
Scheme of Arrangement.
Offer Price:
$xx.xx
Premium:
xx.x%
Slow Future
Growth
Hinders
Kola Co.’s
Outlook
Screening
Criteria
Identified
Our Ideal
Target
Implement
Operational
Initiatives in
Coffee Day
Segments
Valuation
of Target
Shows
Wide Price
Range
Offer Price:
$ 3.23
Premium:
200.0%

FINAL
Key Takeaway :
Notes :
Industry Revenue (in USD billions)
Recent Industry Developments1 – Global Soft Drink & Bottled Water Industry
Summary of Financials3
24-Jul-19
Kola Co. hits a record high after smashing
profit estimates on strong low-sugar drink
sales.
13-Feb-19
Overall sales volumes didn’t grow at all and
actually shrank in North America and at Kola
Co.’s signature sparkling drinks division.
07-Jun-18
Stock took a slight hit due to backlash from
announcing their new flavor called Kola
Clear.
In USD mm (unless stated) FY 14 FY 15 FY 16 FY 17 FY 18 LTM Jun-19 CAGR
Revenue 45,998.0 44,294.0 41,863.0 35,410.0 31,856.0 32,828.0 -7.2%
% YoY growth N/A -3.7% -5.5% -15.4% -10.0% -4.3%
Geographical Segment Revenue CAGR
EBITDA 12,843.0 12,210.0 11,510.0 10,338.0 10,594.0 10,736.0 -3.9%
% margin 27.9% 27.6% 27.5% 29.2% 33.3% 32.7%
Net Income 7,098.0 7,351.0 6,527.0 1,248.0 6,434.0 7,035.0 -0.2%
% margin 15.4% 16.6% 15.6% 3.5% 20.2% 21.4%
Debt to Equity (x) 1.37x 1.72x 1.97x 2.51x 2.29x 2.29x 12.1%
ROE (%) 22.3% 26.2% 26.7% 5.6% 35.4% 36.2% 11.4%
Acquirer Company Profile – The Kola Company (NYSE:KOLA)
Kola Co. is in need of a new growth driver as the soft drinks industry is expected to flatten out in the coming years. Hence, they are looking to further venture into the coffee
industry.
2
The Kola Company’s 3-Year Share Price History2 (as of 8th August 2019)
18%
20%
10%
12%
39%
North America
EMEA
Other (incl. Bottling Inv.)
Asia Pacific
Latin America
Geographical Segment Overview (in USD bn)
70
40
0
60
50
80
Share Price
(USD)
Jul-17 Jul-18 Jul-19
NYSE:KOLA
S&P 500
Current Price:
3-Year High:
3-Year Low:
USD 52.57
USD 54.17
USD 40.36
22%
17%
12%
9%
40%
13%
25%
17%
9%
36% 23%
21%
30%
15%
11%
24%
37%
16%
13%
10%
12%
36%
23%
16%
13%
5.1%
-1.4%
-2.0%
-3.6%
-27.9%
(1) IBIS World, Statista, Investor Presentations; (2) Bloomberg; (3) Capital IQ, Thomson One
1
Date Details
2
3
215
20172014 20162015 2018 2019F 2023F2020F 2021F 2022F 2024F
246
223 210 211 212 213 216 217 218 220
-3.6% +0.6%
Actual Forecast
Key Industry Drivers
Global per capita income1
Per capita healthcare expenditure2
World price of sugar3
GDP of the BRIC nations4
2015 2016 2017 2018
9.3
LTM2019
9.8 10.3 10.8 11.8 11.9
+5.1%
Recent Company Strategy
1 North America 2 EMEA
3 Asia Pacific 4 Latin America
LTM2015 20182016 2017 2019
8.3 7.6 7.3 7.4 7.7 7.7
-1.4%
2015 20192016 LTM2017 2018
5.7 5.3 5.3 5.2 5.2 5.2
-2.0%
20172015
3.9
2016 2018 LTM2019
4.14.7
3.8 4.0 4.0
-3.6%
A Asset Light Model
B Going Into Coffee
20162015 2017 LTM
15.1
2018 2019
18.1 17.5
8.1
3.2 4.2
-25.5%
+
Refranchising
Exercise
Acquisitionof
CostaCoffee
123
Bottling Inv. Revenue

FINAL
Key Takeaway :
Notes :
Strategic Approach – Problem Statement
Kola Co.’s declining geographical revenue segments are hindering the overall company’s growth. Furthermore, the company’s debt situation only allows for a small scale
transaction within the coffee segment.
(1) Capital IQ; (2) Statista; (3) Bloomberg
Kola Co.’s declining geographical revenue segment growth1
3
1
20172015 2016 2018 2019 LTM
5.3
5.7
5.3 5.2 5.2 5.2
-2.0%
Kola Co.’s Revenue in Asia (in USD billions)
2019
4.0
2015 2016 2017 2018 LTM
4.7
4.1 3.8 4.0 3.9
-3.6%
Kola Co.’s Revenue in Latin America (in USD billions)
Currently,3 of 4 geographicalrevenue segmentsare experiencinga steadydecline in growth.However,the
decline in EMEA’s segmentis being addressedwith the recent acquisitionof Costa Coffee but that leaves the
decline in the Asia and Latin America segmentsunaddressed.
Kola Co.’s desire to further consolidate within the coffee segment2
3a
Kola Co. wants to pair Costa Coffee’s expertise with other smaller scale players
3b
Other Out of Home
80%
Coffee Shops 20%
Out of Home NRTD RTD
$ 360 bn $ 125 bn $ 85 bn
Global Coffee and Tea Industry Market Size
(in USD billions)
Kola Co. has mentionedthat they want to furtherconsolidatewithin the coffee segmentin the next 12 to 18
monthsto build up their presence and market share.
32%
68%
Other Drinks
Hot Beverages
$ 485 bn and
growing 6%
annually
Kola Co.’s Hot Beverage Segment Growth Estimates
(in USD billions)
The companyalso showeddesire to pair up the newly acquiredCosta Coffee’s expertise with a smaller scaled
player as they believe the credentialsof Costa Coffeeas a brand.
Coffee Expertise
• Sourcing, roasting
• Coffee Express (fresh beans, fresh milk)
Brand Credentials
• Strong heritage, European / Italian roots
• Credibility to leverage with customers globally
Experience-Led
Brand Building
• Exceptional quality
• 5 million Costa Coffee Club members
Retail Footprint
• Second-largest coffee house in the world
• Location scouting, management
Factors Behind Costa’s Capabilities within the Coffee Segment
Real-TimeRitual Building1
Cash Flow for Reinvestment2
Avenue for Innovation3
Reinforce Brand Reputation4
Costa’s Retail Strengths
Kola Co.’s current gearing situation limits the scale of the transaction1
2
1.37x
1.72x
1.97x
2.50x
2.29x 2.29x
201920172015 20182016 LTM
+10.8%
Kola Co.’s Debt-to-Equity Ratio
26.6x
14.3x 15.7x
12.3x 11.5x 11.6x
20192015 20172016 2018 LTM
-15.3%
Kola Co.’s EBITDA-to-Interest Expense Ratio3
Kola Co.’s currentgearingsituationlimits the scale of the transactionwhich meansthat we can only screen for
smaller scaled players withinthe coffee industry.The board has also mentionedthat they prefer not to issue
shares as part of the transactionfunding.

FINAL
Key Takeaway :
Notes :
In USD mm (unless stated) FY 15 FY 16 FY 17 FY 18 FY 19 CAGR
Revenue 347.1 389.3 436.7 530.3 597.0 14.5%
% growth N/A 12.1% 12.2% 21.4% 12.6%
Segmental Revenue
Adj. EBITDA 72.3 89.4 94.6 108.7 115.2 12.4%
% margin 20.8% 23.0% 21.7% 20.5% 19.3%
Net Income -11.7 -5.9 6.6 14.9 17.9 N/A
% margin -3.4% -1.5% 1.5% 2.8% 3.0%
Debt to Equity (x) 4.05x 1.35x 1.57x 1.69x 2.07x -15.5%
ROE (%) -6.2% -0.5% 2.9% 5.1% 4.8% N/A
Target Company Profile – Coffee Day Enterprises Limited (BSE:539436)
Coffee Day is the ideal target for Kola Co. as it fits all our screening criteria for a target and it also contributes immensely to Kola Co.’s future growth. Due to the recent death of
the founder/chairman, the stock price plummeted which mounted pressure onto CCD management to sell.
(1) Company Website; (2) Bloomberg; (3) Capital IQ, Thomson One; (4) Company Filings
4
Company Overview1
• Along with its subsidiaries, Coffee Day Enterprises (CCD) is engaged in the operation of coffee outlets and other
coffee related businesses,the provision of logisticsservices, financial services and the management of real estate.
• Market Cap: INR 18.1 bn or USD 253.5 mm; Enterprise Value: INR 63.9 bn or USD 896.7 mm (as of 8th August 2019)
• Derives revenue from 4 operating segments (% of Revenue):
o Coffee and Related Business (47.1%): Operates a network of 1,722 café outlets under the Café Coffee Day
(CCD), The Lounge, The Square, and Xpress names in 245 cities
o Integrated Multimodal Logistics (35.1%): Provides integrated logistics services, such as port handling, road
and rail, logistics,container freight stations,and mining logistics.
o Financial Services (12.1%): Offers portfolio management & management, and investment advisory services.
o Real Estate and Hospitality (5.7%): Develops and manages technology parks and related infrastructure for
information technology (IT)/IT-enabledservices enterprises and as well as resorts and hotels.
Summary of Financials3
33%
9%
52%
6%
Coffee Related Business
Financial Services
Integrated Logistics
Real Estate & Hospitality
51%
28%
15%
7%
29%
51%
13%
6%
13%
50%
31%
6%
47%
35%
12%
6%
27-Jul-19
Stock price took a nose dive due to the
apparent death and suicide of
founder/chairman.
21-Sep-18
Increase in stock price due to news of CCD
acquiring MindTree.
19-Jan-18
Stock price increased due to the possibility of
Coffee Day’s founder selling their stake in
tech business owned by CCD
Coffee Day Enterprises Limited’s 3-Year Share Price History2 (as of 8th August 2019)
500
0
100
200
300
400
Share Price
(INR)
BSE:539436
SENSEX-BY
Current Price:
3-Year High:
3-Year Low:
INR 76.85
INR 349.40
INR 76.85 1
Date Details
2
3
12.4%
16.8%
24.1%
12.0%
CAGR
Coffee Day Enterprises Limited’s Segmental Overview4
1 2
3 4
179 222 256 303 286
20182015 2016 2017 2019
+12.4%
Coffee Related Business (in USD mm)
115 120 145
190 213
201820172015 2016 2019
+16.8%
Integrated Logistics (in USD mm)
31
63 67 80 74
20162015 2017 2018 2019
+24.1%
Financial Services (in USD mm)
22
28 30 34 35
20192015 2016 2017 2018
+12.0%
Real Estate & Hospitality (in USD mm)
1
3 2

FINAL
Key Takeaway :
Notes :
Transaction Rationale and Synergy Realization
Synergies to be realized are estimated at $35.7m and are fully realized by the Combined Group’s third year of operation. Majority of the synergies will be derived from revenue
improvements.
(1) Capital IQ; (2) Statista; (3) Bloomberg
Transaction Rationale
5
Estimated Average Annual EBITDA-Level Synergies
Situation Line Item Details Value
Costa India Market Share
• Allows Costa to improve market share through
leveraging CCD managerial experience $ 5.1m
CCD Product Expansion
and Regional Cross Selling
• Develop and sell CCD branded RTD coffee
• Introduce CCD coffee in foreign markets $ 14.4m
Costa and CCD
Employee Cost
• Employee redundancies.
• Board Member redundancies $ 7.4m
Costa and CCD Marketing /
Advertising Cost
• Leverage Different Distribution Channels
• Implement Better Go-to-Market Strategies $ 2.3m
Costa Supply Chain
Improvement
• Sourcing of cheaper raw materials.
• Leverage existing supplier relationships of CCD $ 6.1m
CCD Technology and
Systems Optimization
• Online Server Hosting
• Consolidation of Software and Hardware $ 0.5m
Implied Annual EBITDA
Improvement (FY 22)
+25.7% $ 35.7m
Revenue
Improvement
Cost Savings
Timeline of Synergies Realization
Total
2022
$ 26.8m
$ 35.7m
2021
$ 17.9m
2020 2023 2024
$ 35.7m $ 35.7m100% of Synergies Realized from FY 22 Onwards
75% of Synergies Realized in FY 21
50% of Synergies Realized in FY 20
One-off implementation cost of $ 17.1m
Scales Up Coffee Segment1
1 2 Fixes Asia Revenue Segment’s Growth
Recapture Lost Market Share in India2
3 4 Coffee Day’s Recent Pressure to Sell3
452 461 429 410 391 393
20172015 LTM2016 20192018
-2.8%
This acquisitionwill allow Kola to recapturetheir
fallingrevenue and market share within the Indian
beveragesegment.
Kola Co.’s Revenue in India (in USD millions)
5.3 5.2
LTM20162015 2017 2018 2019
5.7
5.3 5.2 5.2
-2.0%
Kola Co.’s Falling Revenue in Asia (in USD billions)
With CCD’s high growthrate (14.5% 5-Year CAGR),it
will allow Kola to offset/fixits declininggrowthwithin
its Asia segment.
2015 2016 2017 2018
1,148
2019
1,5801,365
1,745 1,836
+12.5%
Given that the boardof Kola Co. has said that they
want to further scale up the coffeesegment,this
acquisitionfacilitatesthat strategicdirection.
Costa and Coffee Day’s Combined Historical Revenue
(in USD millions)
Costa Coffee Café Coffee Day
Coffee Day’s Last 3 Years’ Stock Price (in INR)
400
0
100
500
200
300
CCD
SENSEX-BY
Since the deathof CCD’s founder/chairman,the
company’sshare price has taken a steep dive which
has pressuredthe companyto sell (for super cheap).

FINAL
Key Takeaway :
Notes :
Valuation Summary
We have included a multitude of valuation methodologies in the event of a third party bid from either a strategic or financial buyer thatmay come in during the bidding process.
Our recommended starting bid price for Coffee Day Enterprises Limited is set at $3.23 which reflects a 200% premium to the current share price.
(1) Yahoo Finance; (2) Bloomberg; (3) Thomson One; (4) Capital IQ; (5) Merger Market
6MarketValuationLBO
Current Share Price $ 1.08 Low Details
52-Week Range1
Premium to Spot2
Broker Price Targets3
Trading
Multiples4
EV/FY+1
Revenue
EV/FY+1
EBITDA
Price/FY+1
EPS
Perpetuity Growth
Method
Exit Multiple
Method
Perpetuity Growth
Method
Exit Multiple
Method
Precedent Transactions
EV/LTM EBITDA5
Leveraged Buyout Analysis
FundamentalValuation
DCF
Standalone
DCF
withSynergies
$ 1.08 $ 4.41
• Low: $1.08 on 08/08/2019
• High: $4.41 on 31/09/2018
$ 1.30 $ 1.51 • Reflects illustrative 20% - 40% premium to spot price of $1.08
$ 4.14 $ 4.55
• Low: Maybank Kim Eng
• High: Morgan Stanley
1.8x 2.4x • Screened Industry: 1) Coffee Shop Operators,
2) Logistics Service Providers,
3) Financial Services,
4) Real Estate Operators
• Screened Region: 1) Local (Indian Peers),
2) Regional (Asian Peers),
3) International (Global Peers)
12.8x 14.7x
34.1x 45.2x
1.8% 2.6% • Projection Period: 5 Years
• WACC: 7.4%
• Terminal Growth Rate: 2.2%
• Exit Multiple (EV/EBITDA): 7.8x7.3x 8.3x
1.8% 2.6%
• Projection Period: 5 Years
• WACC: 7.4%
• Terminal Growth Rate: 2.2%
• Exit Multiple (EV/EBITDA): 7.8x
• Annual Pretax Synergies: $35.7m (50%, 75%, 100% Annual Ramp-up)7.3x 8.3x
11.3x 12.8x
• Screened Industry: Coffee Shop Operators
• Screened Region: Local (India), Regional (Asia) and International
150.0% 180.0%
• Assumes 5-year holding period, 20% target IRR, 3.5x gearing, 150% - 180%
offer premium, 10.6x entry multiple and 12.0x exit multiple.
High
$ 1.08 $ 4.41
$ 1.51
$ 2.39 $ 4.40
$ 4.14 $ 4.55
$ 3.12 $ 4.08
$ 2.58 $ 3.43
$ 1.30
$ 1.02 $ 2.06
$ 1.54 $ 2.48
$ 3.34 $ 4.48
$ 2.94 $ 4.07
$ 2.99 $ 3.78
$ 2.69 $ 3.01
$ 3.23Bid Price

FINAL
Key Takeaway :
Notes :
Acquirer Target Adjustments
Pro-Forma
In USD mm (unless stated) KOLA CCD Increase (Decrease)
Cash and equivalents 5,645.0 331.4 (692.1) 5,284.3
Accounts receivable 3,852.0 219.4 4,071.4
Inventory 3,178.0 15.7 3,193.7
Deferred tax assets (current and long term) 2,617.0 10.8 (10.8) 2,617.0
Other current assets 15,865.0 174.0 16,039.0
PP&E 10,108.0 433.5 86.7 10,628.2
Intangibleassets 9,780.0 6.0 9.0 9,795.1
Goodwill 12,964.0 71.3 333.3 (71.3) 13,297.3
Other assets 24,338.0 314.1 24,652.1
Total Assets 88,347.0 1,576.3 429.0 (774.2) 89,578.1
Accounts payable 10,669.0 19.9 10,688.9
Accrued expenses & def rev. (current & non-current) 0.0 8.5 8.5
Revolver and current debt 15,118.0 544.5 15,662.5
Long term debt 30,445.0 372.1 30,817.1
Deferred tax liabilities 2,602.0 2.9 19.1 2,624.0
Other liabilities 9,709.0 185.2 9,894.2
Noncontrollinginterests 2,069.0 89.2 2,158.2
Shareholders' equity 17,735.0 354.1 (364.3) 17,724.8
Total Liabilities + Shareholder’s Equity 88,347.0 1,576.3 19.1 (364.3) 89,578.1
Transaction Overview – Funding and Pro-Forma
We recommend a 100% Cash funding as it is a small scale transactionand the board does not want to give up any equity. Furthermore, the transaction is to be implemented via a
Target Scheme of Arrangement.
(1) Our Analysis; Capital IQ; Thomson One
7
Transaction Highlights Pro-Forma Balance Sheet1
Item Details
Offer Price
• Offer price of $3.23 at 200% premium to current
share price of $1.08. (Offer Value US$ 681.9 mm)
Funding Mix
• 100% Cash as it is a small scale transaction and the
board does not want to give up any equity.
Transaction Metrics
• Implied Equity Value: US$ 681.9 mm
• Implied Enterprise Value: US$ 1,356.3 mm
Post-Transaction
Plans
• Transaction will be followed by a three-phased
corporate restructuring exercise to allow for better
utilization of resources.
Enterprise Value
• Combined group pro forma enterprise value of
approximately US$ 267.6 billion.
Net Debt
• Combined group pro forma net debt of approximately
US$ 43.4 billion.
Equity Value
• Combined group pro forma equity value of
approximately US$ 224.3 billion.
Gross Debt /
EBITDA
• Combined group pro forma Gross Debt / EBITDA of
approximately 4.57x.
Structure
Combined
Group
Metrics
Sources and Uses of Funds
In USD (unless stated) FY 2020F FY 2021F FY 2022F
Coffee Day EPS (Target) 0.08 0.08 0.13
Kola Co. EPS (Buyer) 1.64 2.10 2.26
Combined EPS 1.65 2.11 2.27
Accretion/Dilution ($) 0.01 0.01 0.01
Accretion/Dilution (%) 0.3% 0.3% 0.5%
Accretion/Dilution Analysis
0.3% 0.3%
0.5%
0.0%
0.2%
0.4%
0.6%
0.8%
2020F 2021F 2022F
Sources of Funds
Cash used to acquire target 681.9
Cash for fees 10.2
Total Sources 698.9
Uses of Funds
Cash to target 681.9
Deal fees (advisory, legal, and accounting) 10.2
Total Uses 698.9
Accretion/Dilution Chart

FINAL
Key Takeaway :
Notes :
Post-Transaction Strategic and Restructuring Plans – Overview
From our analysis,it shows that Coffee Day Enterprises Limited is immensely undervalueddue to the recent stock price declination and can easily benefit from restructuring which
will remove its conglomerate discount. Transaction will be followed by a three-phased corporate restructuring exercise.
(1) Capital IQ, Thomson One, Bloomberg
Indicative Sum-of-the Parts Valuation (in INR millions)
Coffee Related Business
Pursue organic top line growth
and margin expansion1 FY 19 – 21
Implementation
Timeline
FY 20 – 21
Pursue organic top line growth
and margin expansion
Top Line Growth Strategies:-
• Shift Coffee Day’s brand positioning
into the premium coffee segment.
• Begin introducing Coffee Day branded
RTD drinks.
Margin Expansion Strategies:-
• Implement supply chain improvement
initiatives.
• Improve marketing strategy.
1
8
Proposed Strategic and Restructuring Plans
Proposed disposal through
trade sale to strategic buyers3
Financial Services
Integrated Logistics
63,880
74,805
Financial
Services
Integrated
Logistics
R.E. &
Hospitality
Current EV Coffee
Business
HoldCo
Discount
20,039
SOTP EV
36,875
8,628
132,340
(8,008)
Real Estate & Hospitality
Coffee business’ property
carve-out followed by a
spin-off
2 FY 19 – 21
Proposed disposal through trade
sale to strategic buyers
• Proposed divestment of the
integrated logistics and financial
services segments to either strategic
or financial buyers.
• A list of potential buyers were
screened locally and globally.
• Expected timeline of divestments
will be 2 years after transaction
closes.
3
Coffee business’ property carve-
out followed by a spin-off
• Carve out coffee-related property
segment into the real estate and
hospitality operations segment.
• Leasebackproperties.
• Spin off real estate segment and
redistribute shares pro-rata.
• Scale up Spin Co. by injecting the
remaining Costa Coffee property
assets into new Spin Co.
2
~ ₹ 68.5 bn
or
~ $ 958.3 mn
unlocked
Existing
Enterprise
Value
SOTP Pure-play Implied Valuations
7.8x 22.3x 11.6x 11.1x 25.4x* (20%) 16.2x EV/EBITDA
(in INR mm, except per share data) EV/EBITDA SOTP Valuation
Coffee Business 22.3x 74,805
Plus: Integrated Logistics 11.6x 20,039
Plus: Real Estate & Hospitality Investments 11.1x 36,875
Plus: Financial Services 25.4x* 8,628
Less: HoldCo Discount (Logistics and Real Estate) (20%)* (8,008)
Indicative SOTP Enterprise Value 132,340
Less: Total Debt (65,474)
Less: Non-controlling Interest (6,371)
Plus: Cash and Cash Equivalents 23,669
Indicative SOTP Equity Value 84,164
Shares Outstanding (mm) 211.3
INR to USD Exchange Rate (08/08/19) 0.014
Indicative SOTP Share Price +73.7% USD 5.61
Proposed Bid/Offer Price USD 3.23
Calculations – Axe Capital’s Estimates1

FINAL
Key Takeaway :
Notes :
Strategic Buyers Financial Buyers
Post-Transaction Strategic and Restructuring Plans – In Depth Details
In depth details of our restructuring plan has been laid out and potential strategic/financial buyers have been identified for the soon-to-be divested segments.
(1) Capital IQ, Bloomberg, Yahoo Finance
9
Real Estate Segment: Post Carve-Out Spin-Off Plans
Integrated Logistics Segment: Divestment
Financial Services Segment: Divestment
2b
3a
3b
Coffee Segment: Top Line Growth & Margin Expansion
1
Real Estate Segment: Carve-Out and Leaseback
2a
Trading
Multiples1
EV/FY+1
Revenue
EV/FY+1
EBITDA
EV/LTM EBITDA
Trading
Multiples1
EV/FY+1
Revenue
EV/FY+1
EBITDA
EV/LTM EBITDA
Implied Transaction EV:
2.2x 3.8x
9.7x 16.9x
11.6x 17.3x
Low High$ 630 mm
0.8x 2.4x
12.7x 13.2x
14.2x 14.3x
Low HighImplied Transaction EV: $ 336 mm
Trading
Multiples1
Price/FY+1
Earnings
Price/FY+1
BV
Price/LTM BV
12.5x 43.2x
2.1x 3.6x
2.3x 6.0x
Low HighImplied Transaction EV: $ 154 mm
Strategic Buyers Financial Buyers
Coffee
Business
Physical
Coffee Shops
Coffee
Business
Coffee
Business
Tech
Parks
Real Estate
Operation
Hospitality
Business
Coffee
Business
Coffee
Business
Coffee
Business
Tech Parks
Real Estate
Operation
Physical
Coffee Shops
Hospitality
Leaseback
Properties
Carve-Out into
Real Estate Segment
Step 1 Step 2
Coffee
Business
Coffee
Business
Coffee
Business
Real Estate
Operation
Coffee
Business
Real Estate
Spin Co.
Inject Spin Co. with
Costa’s Physical Stores
in India
Step 2Step 1
Spin-Off and
Redistribute
Shares Pro-Rata
ImpliedValuationImpliedValuationImpliedValuation
INDIAGLOBALINDIAGLOBAL
Details Strategic Implementation
Shift Coffee Day’s
Brand Positioning
• Costa Coffee’s expertise in the premium
coffee segment allows Coffee Day to
introduce premium store formats.
Introduce Product
Diversification
• Kola can start developing Coffee Day
branded ready-to-drink (RTD) products
to be sold in local retail stores.
Improve Supply Chain
Efficiency
• With Kola’s extensive managerial
experience, we can implement a much
leaner operation within its supply chain.
Improve Marketing
Strategy Effectiveness
• Using data analytics and Kola’s longtime
marketing experience to increase Coffee
Day’s marketing strategy.
TopLineGrowthMarginExpansion

FINAL
Key Takeaway :
Notes :
Risks & Mitigation
This transaction faces a number of regulatory, operational and post-transactional risks which can be mitigated by The Kola Company’s management team.
(1) Company Filings; IBIS World
Scenario Analysis
Highly
Likely
Not
Likely
High ImpactLow Impact
R2
O1
O2
T2
T1
R1
10
RegulatoryRisks
SEC Concerns (R1)
FTC Concerns (R2)
Operational Risks
Inability to Carve Out Real Estate Co. (O1)
Operating Initiatives Not Fully Realized(O2)
Post-Transaction Risks
Market Value Decline Post Spin-Off (T1)
Unexpected Costs of Restructuring(T2)
Transaction Risks1
Situation Details Mitigation
SEC Concerns
• SEC may post questions on the
transparency of the transactionand
the controlling stakeholder’s identity
post-buyout.
• Comply with disclosure requirements as
directed by legal advisors.
• Thoroughly discuss the post-buyout
ownership and leadership structure.
FTC Concerns
• FTC may block the deal due to
suspicion of opportunistic
exploitation of inside information
• Consult legal and financial advisor, strictly
follow the detailed disclosure and approval
procedures.
Inability to Carve
Out Real Estate
Co.
• There might be complicationsthat
can arise from the attempted carve-
out of the property assets and also
from the following spin-off.
• Kola Co. can hire the best restructuring
firms to avoid any complicationsto arise
during the final phase of real estate setup.
Operating
Initiatives Not
Fully Realized
• Uncertainty in realization of operating
initiatives and business
improvements may negatively impact
business performance.
• Offer via Scheme of Arrangement enables
external parties to conduct thorough due
diligence prior to transaction.
Market Value
Decline Post
Spin-Off
• Risk that combined market value of
new CCD and Real Estateentity will
be less than market value of CCD
immediately prior to the carve-out.
• Delayed implementation period allows Kola
Co. to rectify all shortfalls in value leakages
through in-depth quarterly review.
Unexpected
Costs of
Restructuring
• Restructuringand operational
initiatives may lead to unexpected
costs which negatively affect
earnings.
• Kola Co. should put in place transition
programs prior to restructuringto ensure
smoother flow in retraining employees and
other intersegment related matters.

FINAL
Key Takeaway :
Notes :
List of Potential 3rd Party Bidders/Interlopers
Not applicable for appendices.
1. Company websites; 2. Capital IQ, Thomson One; 3. Scale from 1-5 (Higher and darker is better)
Strategic Fit
List of Potential Interlopers Likeliness to Bid3
Company/Firm Business Overview1 Rationale Financials2 (USD mm)
PepsiCo.
PepsiCo, Inc. operates as a food and beverage company worldwide. The
company is mostly known for its main product offering within the soft
drink segmentlike Pepsi,Gatoradeand MountainDew.
PepsiCo. will be looking to
follow suit and expand into
coffee as their soft drink sales
have been declining.
• LTM Revenue – $65,342
• LTM EBIT – $10,637
• Total Assets – $75,084
Starbucks Corp.
Starbucks Corporation, together with its subsidiaries, operates as a
roaster,marketer,and retailerof specialtycoffeeworldwide.
Starbucks might be looking to
gain market share within India
(one of its final frontiers)
• LTM Revenue – $26,065
• LTM EBIT – $3,830
Luckin Coffee
Luckin Coffee Inc. engages in the retail sale of freshly brewed drinks,
and pre-made food and beverage items in the People's Republic of
China. It offers freshly brewed drinks, including freshly brewed coffee
and non-coffeedrinks
The company is looking outside
its Chinese borders to grow
and CCD might give them a
very cheap solution.
• LTM Revenue – $292
• LTM EBIT – ($328)
KOMEDA Hldgs.
KOMEDA Holdings Co., Ltd. operates a chain of coffee shops in Japan. It
is also involved in the manufacture and sale of breads; and sub-lease of
stores.
The company is looking to
expand outside of Japan as
domestic revenue is declining.
• LTM Revenue – $290
• LTM EBIT – $73
• Total Assets – $872
Blackstone
The Blackstone Group is an alternative asset management firm
specializing in real estate, private equity, hedge fund solutions, credit,
secondary funds of funds, and multi-assetclass strategies.
Heavy interest in CCD’s real
estate segment and might look
to sell delever the company.
• AUM – $472,000
KKR
KKR & Co. Inc. is a private equity and real estate investment firm
specializing in direct and fund of fund investments; mainly through
acquisitions,leveragedbuyoutsand growthequity investments.
KKR is looking to invest in
Indian retail brands from FY18
onwards.
• AUM – $148,500
TATA Capital
Tata Capital is a private equity and venture capital arm of Tata Capital
Limited specializing in middle market, buyouts, turnaround, and growth
capitalinvestmentsin stressedsmall and mediumsized enterprises.
The company is known to
invest in distressed Indian
enterprises.
• AUM – $11,240
Total
4 3 3 5 2 17
5 3 2 5 2 17
5 2 2 2 4 15
5 2 2 3 2 14
3 4 5 5 5 22
3 4 4 5 5 21
2 5 4 3 4 18
1 Regional Expertise2 Recent M&A Activity3 Balance Sheet4 Interest in Other Segments5
1 2 3 4 5
A

FINAL
Key Takeaway :
Valuation: Trading Comparables Analysis
Company Name
Market Cap
(USD mm)
Enterprise Value
(USD mm)
EV/Revenue EV/EBITDA P/E
LTM FY+1 FY+2 LTM FY+1 FY+2 LTM FY+1 FY+2
Indian Peers
Dabur India Limited 10,930.9 10,857.0 8.80x 8.15x 7.26x 42.90x 38.55x 33.68x 52.70x 47.05x 40.72x
Godrej Consumer Products Limited 9,411.6 9,691.4 6.80x 6.28x 5.66x 32.40x 29.28x 25.79x 28.50x 40.87x 35.33x
Jubilant FoodWorks Limited 2,192.2 2,097.4 4.10x 3.72x 3.19x 22.10x 15.37x 13.59x 48.90x 44.63x 35.47x
Westlife Development Limited 591.0 607.7 3.00x 2.71x 2.29x 34.60x 28.67x 21.04x 136.30x 103.65x 53.26x
International Peers
Starbucks Corporation 115,271.1 121,596.4 4.70x 4.60x 4.28x 21.90x 21.32x 19.08x 34.40x 34.06x 30.89x
Café de Coral Holdings Limited 1,891.8 1,779.5 1.60x 1.55x 1.45x 13.40x 12.79x 11.80x 25.30x 23.83x 22.52x
KOMEDA Holdings Co., Ltd. 849.5 1,315.2 4.50x 4.43x 4.12x 16.40x 16.47x 15.68x 17.40x 16.64x 15.96x
Average 4.79x 4.49x 4.04x 26.24x 23.21x 20.09x 49.07x 44.39x 33.45x
Lower Quartile 3.55x 3.22x 2.74x 19.15x 15.92x 14.64x 26.90x 28.95x 26.71x
Median 4.50x 4.43x 4.12x 22.10x 21.32x 19.08x 34.40x 40.87x 35.33x
Upper Quartile 5.75x 5.44x 4.97x 33.50x 28.98x 23.42x 50.80x 45.84x 38.10x
Revenue
(INR mm)
EV/FY+1 Revenue Enterprise Value
Low High Low High
47,321.1 1.78x 3.22x 84,231.6 152,137.3
Enterprise Value 84,231.6 152,137.3
Less: Total Debt 65,474 65,474
Less: Non-controlling Interest 6,371 6,371
Plus: Cash and Cash Equivalents 23,669 23,669
Implied Equity Value 36,056 103,961
Shares Outstanding (mm) 211.3 211.3
INR to USD Exchange Rate 0.014 0.014
Implied Value per Share $2.39 $6.89
FY+1 EBITDA
(INR mm)
EV/FY+1 EBITDA Enterprise Value
Low High Low High
7,450 12.79x 14.73x 95,285.5 109,701.3
Net Income
(INR mm)
Price/FY+1 Earnings Equity Value
Low High Low High
1,143 34.06x 45.24x 38,941 51,717
EV/FY+1 Revenue Multiple EV/FY+1 EBITDA Multiple Price/FY+1 Earnings Multiple
B

FINAL
Key Takeaway :
Valuation: Discounted Cash Flow Analysis (Perpetuity Growth Method)
Historical Period CAGR Projection Period CAGR
(in INR mm, except per share data) 2017 2018 2019 (‘17-’19) 2020 2021 2022 2023 2024 (‘20-’24)
Revenue 31,196 37,880 42,645 16.9% 47,321 53,103 59,778 67,549 76,600 12.8%
% growth N/A 21.4% 12.6% 11.0% 12.2% 12.6% 13.0% 13.4%
Cost of revenue (18,641) (23,145) (27,126) (28,913) (32,446) (36,524) (41,273) (46,803)
Gross Profit 12,556 14,735 15,519 11.2% 18,408 20,657 23,253 26,276 29,797 12.8%
% margin 40.2% 38.9% 36.4% 38.9% 38.9% 38.9% 38.9% 38.9%
SG&A & Other Expenses/(Income) (8,066) (9,573) (10,210) (14,405) (15,824) (17,775) (20,085) (22,777)
EBITDA 6,759 7,766 8,229 10.3% 7,450 8,796 9,917 11,207 12,708 14.3%
% margin 21.7% 20.5% 19.3% 15.7% 16.6% 16.6% 16.6% 16.6%
Depreciation & Amortization (2,268) (2,604) (2,920) (3,447) (3,962) (4,439) (5,016) (5,688)
EBIT 4,490 5,162 5,308 8.7% 4,003 4,833 5,479 6,191 7,020 15.1%
% margin 14.4% 13.6% 12.4% 8.5% 9.1% 9.2% 9.2% 9.2%
Taxes (555) (768) (658) (185) (523) (785) (902) (980)
EBIAT 3,935 4,393 4,651 8.7% 3,819 4,310 4,694 5,289 6,040 12.1%
Depreciation & Amortization 3,447 3,962 4,439 5,016 5,688
Capital Expenditures (6,123) (6,116) (6,116) (6,096) (5,995)
Increase in Net Working Capital (67) (730) (923) (1,231) (1,456)
Unlevered Free Cash Flow 1,076 1,426 2,094 2,977 4,277
WACC 7.4%
Discount Period 1.0 2.0 3.0 4.0 5.0
Discount Factor 0.93 0.87 0.81 0.75 0.70
Present Value of Free Cash Flow 1,002 1,236 1,690 2,238 2,994
Weighted Average Cost of Capital Calculation
Capital Structure
Debt-to-Total Capitalization 67.4%
Equity-to-Total Capitalization 32.6%
Cost of Debt
Cost of Debt 9.3%
Tax Rate 31.0%
After-tax Cost of Debt 6.4%
Cost of Equity
Risk-free Rate 6.6%
Market Risk Premium 2.6%
Levered Beta 1.10
Cost of Equity 9.4%
WACC 7.4%
DCF Perpetuity Growth Method
Perpetuity Growth Rate 2.20%
2023 FCF 4,277
Present Value of Terminal Value 58,878
Present Value of FCF 9,160
Enterprise Value 68,038
Less: Total Debt 65,474
Less: Non-controlling Interest 6,371
Equity Value 19,862
Implied DCF Share Price (USD) $ 1.32
Sensitivity Analysis
6.6% 6.8% 7.0% 7.2% 7.4% 7.6% 7.8% 8.0% 8.2%
1.4% 1.45 1.26 1.08 0.92 0.77 0.63 0.49 0.37 0.25
1.6% 1.62 1.42 1.23 1.05 0.89 0.74 0.60 0.47 0.34
1.8% 1.80 1.58 1.38 1.20 1.02 0.86 0.71 0.57 0.44
2.0% 2.00 1.77 1.55 1.35 1.16 0.99 0.83 0.68 0.55
2.2% 2.22 1.96 1.73 1.51 1.32 1.13 0.96 0.80 0.66
2.4% 2.46 2.18 1.93 1.69 1.48 1.28 1.10 0.93 0.78
2.6% 2.72 2.41 2.14 1.89 1.66 1.45 1.25 1.07 0.90
2.8% 3.01 2.67 2.37 2.10 1.85 1.62 1.41 1.22 1.04
3.0% 3.33 2.96 2.63 2.33 2.06 1.81 1.59 1.38 1.19
Weighted Average Cost of Capital
TerminalGrowthRate
C

FINAL
Key Takeaway :
Valuation: Discounted Cash Flow Analysis (Exit Multiple Method)
Revenue 31,196 37,880 42,645 16.9% 47,321 53,103 59,778 67,549 76,600 12.8%
% growth N/A 21.4% 12.6% 11.0% 12.2% 12.6% 13.0% 13.4%
Cost of revenue (18,641) (23,145) (27,126) (28,913) (32,446) (36,524) (41,273) (46,803)
Gross Profit 12,556 14,735 15,519 11.2% 18,408 20,657 23,253 26,276 29,797 12.8%
% margin 40.2% 38.9% 36.4% 38.9% 38.9% 38.9% 38.9% 38.9%
EBITDA 6,759 7,766 8,229 10.3% 7,450 8,796 9,917 11,207 12,708 14.3%
% margin 21.7% 20.5% 19.3% 15.7% 16.6% 16.6% 16.6% 16.6%
EBIT 4,490 5,162 5,308 8.7% 4,003 4,833 5,479 6,191 7,020 15.1%
% margin 14.4% 13.6% 12.4% 8.5% 9.1% 9.2% 9.2% 9.2%
Taxes (555) (768) (658) (185) (523) (785) (902) (980)
EBIAT 3,935 4,393 4,651 8.7% 3,819 4,310 4,694 5,289 6,040 12.1%
WACC 7.4%
Discount Factor 0.93 0.87 0.81 0.75 0.70
Capital Structure
Cost of Debt
Cost of Debt 9.3%
Tax Rate 31.0%
Cost of Equity
Risk-free Rate 6.6%
Levered Beta 1.10
Cost of Equity 9.4%
WACC 7.4%
DCF Exit Multiple Method
EBITDA Multiple 7.8X
Terminal Year EBITDA 12,708
Equity Value 30,364
6.6% 6.8% 7.0% 7.2% 7.4% 7.6% 7.8% 8.0% 8.2%
7.00x 1.71 1.67 1.63 1.58 1.54 1.50 1.46 1.42 1.37
7.20x 1.84 1.79 1.75 1.70 1.66 1.61 1.57 1.53 1.49
7.40x 1.96 1.91 1.87 1.82 1.78 1.73 1.69 1.64 1.60
7.60x 2.08 2.03 1.99 1.94 1.89 1.85 1.80 1.76 1.72
7.80x 2.20 2.15 2.11 2.06 2.01 1.97 1.92 1.87 1.83
8.00x 2.33 2.28 2.23 2.18 2.13 2.08 2.03 1.99 1.94
8.20x 2.45 2.40 2.35 2.30 2.25 2.20 2.15 2.10 2.06
8.40x 2.57 2.52 2.47 2.42 2.37 2.32 2.27 2.22 2.17
8.60x 2.69 2.64 2.59 2.53 2.48 2.43 2.38 2.33 2.28
ExitEBITDAMultiple
D

FINAL
Key Takeaway :
Valuation: Discounted Cash Flow Analysis with Synergies (Perpetuity Growth Method)
Revenue 31,196 37,880 42,645 16.9% 47,321 53,103 59,778 67,549 76,600 12.8%
% growth N/A 21.4% 12.6% 11.0% 12.2% 12.6% 13.0% 13.4%
Cost of revenue (18,641) (23,145) (27,126) (28,913) (32,446) (36,524) (41,273) (46,803)
Gross Profit 12,556 14,735 15,519 11.2% 18,408 20,657 23,253 26,276 29,797 12.8%
% margin 40.2% 38.9% 36.4% 38.9% 38.9% 38.9% 38.9% 38.9%
EBITDA (incl. Synergies) 6,759 7,766 8,229 10.3% 8,726 10,709 12,469 13,758 15,260 15.0%
% margin 21.7% 20.5% 19.3% 18.4% 20.2% 20.9% 20.4% 19.9%
EBIT 4,490 5,162 5,308 8.7% 5,279 6,747 8,030 8,742 9,572 16.0%
% margin 14.4% 13.6% 12.4% 11.2% 12.7% 13.4% 12.9% 12.5%
Taxes (555) (768) (658) (185) (523) (785) (902) (980)
EBIAT 3,935 4,393 4,651 8.7% 5,094 6,224 7,245 7,840 8,592 14.0%
WACC 7.4%
Discount Factor 0.93 0.87 0.81 0.75 0.70
Capital Structure
Cost of Debt
Cost of Debt 9.3%
Tax Rate 31.0%
Cost of Equity
Risk-free Rate 6.6%
Levered Beta 1.10
Cost of Equity 9.4%
WACC 7.4%
DCF Perpetuity Growth Method
Perpetuity Growth Rate 2.20%
2023 FCF 6,828
Equity Value 63,595
6.6% 6.8% 7.0% 7.2% 7.4% 7.6% 7.8% 8.0% 8.2%
1.4% 4.43 4.13 3.85 3.58 3.34 3.11 2.90 2.70 2.51
1.6% 4.70 4.38 4.07 3.80 3.54 3.29 3.07 2.86 2.66
1.8% 4.99 4.64 4.32 4.02 3.75 3.49 3.25 3.02 2.81
2.0% 5.31 4.93 4.59 4.27 3.97 3.70 3.44 3.20 2.98
2.2% 5.66 5.25 4.87 4.53 4.21 3.92 3.65 3.39 3.16
2.4% 6.04 5.59 5.19 4.82 4.48 4.16 3.87 3.60 3.35
2.6% 6.46 5.97 5.53 5.13 4.76 4.42 4.11 3.82 3.55
2.8% 6.92 6.39 5.90 5.47 5.07 4.70 4.37 4.06 3.77
3.0% 7.43 6.84 6.32 5.84 5.40 5.01 4.65 4.31 4.00
TerminalGrowthRate
E

FINAL
Key Takeaway :
Valuation: Discounted Cash Flow Analysis with Synergies (Exit Multiple Method)
Revenue 31,196 37,880 42,645 16.9% 47,321 53,103 59,778 67,549 76,600 12.8%
% growth N/A 21.4% 12.6% 11.0% 12.2% 12.6% 13.0% 13.4%
Cost of revenue (18,641) (23,145) (27,126) (28,913) (32,446) (36,524) (41,273) (46,803)
Gross Profit 12,556 14,735 15,519 11.2% 18,408 20,657 23,253 26,276 29,797 12.8%
% margin 40.2% 38.9% 36.4% 38.9% 38.9% 38.9% 38.9% 38.9%
EBITDA (incl. Synergies) 6,759 7,766 8,229 10.3% 8,726 10,709 12,469 13,758 15,260 15.0%
% margin 21.7% 20.5% 19.3% 18.4% 20.2% 20.9% 20.4% 19.9%
EBIT 4,490 5,162 5,308 8.7% 5,279 6,747 8,030 8,742 9,572 16.0%
% margin 14.4% 13.6% 12.4% 11.2% 12.7% 13.4% 12.9% 12.5%
Taxes (555) (768) (658) (185) (523) (785) (902) (980)
EBIAT 3,935 4,393 4,651 8.7% 5,094 6,224 7,245 7,840 8,592 14.0%
WACC 7.4%
Discount Factor 0.93 0.87 0.81 0.75 0.70
Capital Structure
Cost of Debt
Cost of Debt 9.3%
Tax Rate 31.0%
Cost of Equity
Risk-free Rate 6.6%
Levered Beta 1.10
Cost of Equity 9.4%
WACC 7.4%
DCF Exit Multiple Method Sensitivity Analysis
6.6% 6.8% 7.0% 7.2% 7.4% 7.6% 7.8% 8.0% 8.2%
7.00x 3.16 3.10 3.05 2.99 2.94 2.89 2.83 2.78 2.73
7.20x 3.30 3.25 3.19 3.14 3.08 3.03 2.97 2.92 2.87
7.40x 3.45 3.39 3.34 3.28 3.22 3.17 3.11 3.06 3.00
7.60x 3.60 3.54 3.48 3.42 3.36 3.31 3.25 3.19 3.14
7.80x 3.75 3.68 3.62 3.56 3.51 3.45 3.39 3.33 3.28
8.00x 3.89 3.83 3.77 3.71 3.65 3.59 3.53 3.47 3.41
8.20x 4.04 3.98 3.91 3.85 3.79 3.73 3.67 3.61 3.55
8.40x 4.19 4.12 4.06 3.99 3.93 3.87 3.81 3.74 3.68
8.60x 4.33 4.27 4.20 4.14 4.07 4.01 3.94 3.88 3.82
ExitEBITDAMultiple
EBITDA Multiple 7.8X
Terminal Year EBITDA 15,260
Equity Value 52,903
F

FINAL
Key Takeaway :
Valuation: Precedent Transactions Analysis
Target Buyer Date Total Transaction Value (USD mm) EV/LTM Revenue EV/LTM EBITDA
Costa Limited The Coca-Cola Company (NYSE:KO) 31-Aug-18 5,061.7 2.33x 16.37x
OldTown Berhad Jacobs Douwe Egberts B.V. 11-Dec-17 363.7 1.82x 12.78x
Loungers plc (AIM:LGRS) Lion Capital LLP 20-Dec-16 191.4 2.78x 21.28x
Nutricafés, S.A. Segafredo Zanetti - ComercializaCAo E DistribuiCAo De CafE, S.A. 12-Jul-16 82.5 2.19x 8.56x
Starbucks Coffee Japan, Ltd. SCI Ventures, S.L. 23-Sep-14 406.9 1.92x 11.76x
Max's Group, Inc. (PSE:MAXS) The Real American Doughnut Inc. & others 17-Jan-14 18.4 1.94x 13.16x
Tsit Wing International Holdings Limited Wong's Brothers Consortium Inc. 11-Jun-13 54.8 2.62x 7.99x
Caribou Coffee Company, Inc. BDT Capital Partners, LLC; JAB Beech Inc. 17-Dec-12 338.5 2.29x 11.34x
Peet's Coffee & Tea, Inc. JAB Holdings B.V.; BDT Capital Partners, LLC 23-Jul-12 1,009.7 3.49x 22.11x
Average 2.38x 13.93x
Lower Quartile 1.94x 11.34x
Median 2.29x 12.78x
Upper Quartile 2.62x 16.37x
LTM Revenue
(INR mm)
EV/LTM Revenue Enterprise Value
Low High Low High
42,645 1.94x 2.29x 82,730.9 97,656.6
LTM EBITDA
(INR mm)
EV/LTM EBITDA Enterprise Value
Low High Low High
8,229 11.34x 12.78x 93,312.3 105,161.5
EV/LTM Revenue Multiple EV/LTM EBITDA Multiple
G

FINAL
Key Takeaway :
Leveraged Buyout Analysis Details
Valuation: Leveraged Buyout Analysis
Uses of Funds
Buyout of equity 636.55
Offer premium 180.00%
Offer price/share 3.01
Diluted shares outstanding 211.30
TransactionFees 9.55
Financing Fees 6.37
Old Co. debt refinanced 916.6
Total uses 1,569.09
Sources of Funds
Loans
Tranche A 235.36
Tranche B 235.36
High yield bonds
Mezzanine 156.91
Equity
Sponsor Equity 610.09
Existing cash on B/S 331.37
Total sources 1,569.09
Current Valuation
EBITDA 115.20
EV 1,221.81
EV/EBITDA 10.6x
Exit Assumptions (5 years later)
EV/EBITDA 12.0x
EBITDA 192.61
Enterprise value 2,311.33
Debt 412.0
Cash 120.0
Equity value 2,019.33
Sponsor Equity 2,019.3
Capital Structure
Returns to Financial Investor FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 (Exit)
Common Equity
Initial Investment: (610.1)
Dividends: 213.1
Equity: 2,019.3
Total Cash Flows: (610.1) - 213.1 - - 2,019.3
Money-on-Money (MoM) Multiple: 3.7x
Internal Rate of Return (IRR): 27.0%
Estimated Financial Investor Returns Analysis
235
1,238
235
157
610
Tranche BTranche A Mezzanine Sponsor Equity Total
Debt: USD 627.6m
(50.7%)
Equity: USD 610.1m
(49.3%)
H

FINAL
Key Takeaway :
Synergy Calculations (Base Case)
Cost - Employee Cost Synergy
CCD Total CCD Employees in India 6,342
Total Employee Expense in India 76.9
Average cost per employee 0.012
Total board members 6.0
Board members expense 0.029
Average cost per board member 0.0049
KOLA Total Coke and Costa Employees in India 1,450
Merged Entity Employee Count (Before Redundancy) 7,792.0
Average Cost per Employee 0.013
% Employeesmade redundant 7%
Employee Count (After Redundancy) 7,246.6
Total Employee Cost without Redundancy 104.9
Total Employee Cost with Redundancy 97.5
Total employee cost savings 7.3
# of CCD board member made redundant 6.0
Total board members cost savings 0.03
Total Employee Cost Savings 7.4
Cost - Supply Chain Improvement/COGS Improvement
CCD COGS (as % of revenue) 41.5%
KOLA Costa's India Operation COGS (as % of revenue) 53.5%
Merged Entity KO Coffee Revenue FY21F attributed to India 50.8
COGS (before) 27.2
COGS (after) 21.1
Total COGS Savings 6.1
Cost - Technology Integration and Systems Optimization
CCD Technology Cost 1.8
KOLA Technology Cost for Coke and Costa in India 3.4
Merged Entity Total Technology Cost without reduction 5.2
% Expectedcost savings 10%
Total Technology cost with reduction 4.7
Total Technology Cost Savings 0.5
Cost - Marketing and Advertising
CCD Marketing and Advertising Cost 6.8
KOLA Mktg. and Adv. Cost for Coke & Costa in India 15.9
Merged Entity Total Marketing Cost without reduction 22.7
Total Marketing cost with reduction 20.4
Total Marketing & Advertising Cost Savings 2.3
Total Cost Synergies at EBITDA Level $ 16.25
Revenue - Improvement of Market Share
CCD Current market share in India 45.30%
KOLA Current market share in India (Costa) 3.50%
Merged Entity
Additional market share boost (net of
cannibalization) 7.00%
Costa Revenue FY19F attributedto India 25.4
w/ added market share FY 21F 50.8
Additional Revenue from increase in yield 25.4
Net additional EBITDA (20.1% Margin) 5.1
Revenue - Product Expansion & Cross Selling
Merged Entity Additional RTD CCD Offering 42.9
% Expectedrevenueboost 15%
RTD CCD Introduction in Foreign Markets 28.6
Total Revenue Synergies at EBITDA Level $ 19.47
Total Synergies at EBITDA Level
Cost Synergies Employee Cost Savings 7.4
Supply Chain Improvement 6.1
Technology and Systems Cost Savings 0.5
Marketing and Advertising Cost Savings 2.3
Revenue Synergies Market Share Improvement 5.1
Product Offering Expansion 8.6
Product Cross Selling 5.7
I

FINAL
Key Takeaway :
Synergy Calculations (Bull Case)
COGS (before) 33.0
COGS (after) 24.3
Merged Entity
J

FINAL
Key Takeaway :
Synergy Calculations (Bear Case)
COGS (before) 19.4
COGS (after) 17.2
Merged Entity
K

FINAL
Key Takeaway :
Merger Model (Part A)
General information
Current date 08-08-19
Acquirer
Name The Coca-Cola Company
Ticker KO
Latest filing date 31-03-19
Filing type (10K or 10Q) 10-Q
Current share price $52.57
Target
Name Coffee Day Enterprises
Ticker CCD
Latest filing date 31-03-19
Filing type (10K or 10Q) 10K
Current Share Price (as at 08-Aug-2019) $1.08
% Offer premium 200%
Offer price per share $3.23
Diluted shares outstanding(MM) 211.3
Offer value 681.9
Deal structure
% Stock 0%
% Cash 100%
Tax structure Stock sale
Acquirer shares issued in transaction 0.0
Nominal exchangeratio 0.061x
Actual exchangeratio 0.000x
Transaction Assumptions
Other assumptions
Deal fees as % of offer value 1.50%
Deal fees 10.2
Assumed annual pretax cost synergies 35.7
The Coca-Cola Company calendar year ending 2019 EBITDA 10,687.0
Coffee Day Enterprises calendar year ending 2019 EBITDA 115.2
Acquirer tax rate 20.00%
Target tax rate 31.00%
Transaction financing
% Cash considerationfinanced with debt 0%
% Cash considerationfinanced with excess cash 100%
Acquirer new borrowing 0.0
Acquirer excess cash used 681.9
% of total acquirercash balance 12.1%
Treatment of target debt Assumed
Debt to be refinanced 0.0
Total acquisition financing 0.0
Acquirer available cash 5,645.0
Target debt outstanding 916.6
Term of loan 10 years
Financing fees as % of acquisitionfinancing 1.00%
Financing fees -
Annual financing fee amortization 0.0
Interest rate on new debt 4.0%
Interest earned on cash 1.0%
INR/USDSpot Rate (08 Aug 2018) 0.0140
Asset write-ups
Tangible assets
Book value of target PP&E 433.5
% Write-up 20%
Asset write-up 86.7
Useful life 20 years
Incremental depreciationexpense 4.3
Incremental deferred tax liabilities 17.3
Intangibleassets
Book value of target intangible assets 6.0
% Write-up 150.0%
Asset write-up 9
Useful life 115 years
Incremental amortizationexpense 0.1
Incremental deferred tax liabilities 1.8
Purchase Price Allocation
Targetassets - book value 1,576.3
Plus: PP&Ewrite ups 86.7
Plus: Intangibleasset write ups 9
Less: Write off of target goodwill (71.3)
Less: Write off of target deferred tax assets (10.8)
Target assets - fair market value 1,589.9
Targetliabilities- book value 1,222.2
Less: Write off of target deferred tax liabilities 0.0
Plus: New deferred tax liabilitiescreated 19.1
Target liabilities - fair market value 1,241.3
Target net book value - fair market value 348.6
Offer value 681.9
Goodwill created in transaction 333.3
Write-Ups and Purchase Price Allocation
L

FINAL
Key Takeaway :
Merger Model (Part B)
Accretion / Dilution Analysis Accretion / Dilution Sensitivity Analysis (Synergy Cases)
EPS Accounting: GAAP EPS FY 2020 FY 2021 FY 2022
31-03-20 31-03-21 31-03-22
Acquirer
Net income 6,744.0 9,029.4 9,682.8
GAAP EPS 1.64 2.10 2.26
Diluted shares outstanding(weightedavg.) 4,123.6 4,300.7 4,289.2
Target
Net income 17.9 16.0 26.8
GAAP EPS 0.08 0.08 0.13
Diluted shares outstanding(weightedavg.) 211.3 208.3 205.3
Transactionrelated expenses/income
Less: Interestexpense from new deal debt - - -
Less: Interestincome on cash forgone (6.9) (6.9) (6.9)
Plus: Synergies 17.9 26.8 35.7
Less: IncrementalD&A expense (4.4) (4.4) (4.4)
Less: Financing fee amortization 0.0 0.0 0.0
Taxes (assumed at acquirer's rate) (1.3) (3.1) (4.9)
Total after tax transaction related income/ (expenses) 5.2 12.4 19.5
Pro Forma GAAP EPS 6,767.1 9,057.8 9,729.1
Pro Forma Shares Outstanding 4,123.6 4,300.7 4,289.2
Pro forma GAAP EPS $1.64 $2.11 $2.27
Acquirer standalone EPS $1.64 $2.10 $2.26
Accretion / Dilution per share $0.01 $0.01 $0.01
Accretion / Dilution % 0.3% 0.3% 0.5%
Additional pretax synergies required to breakeven 0.0 0.0 0.0
20212020 2022
$ 17.9m
$ 26.8m
$ 35.7m
Base Case
20212020 2022
$ 21.6m
$ 32.4m
$ 43.2m
Bull Case
Synergies Realized
20212020 2022
$ 11.5m
$ 17.2m
$ 23.0m
Bear Case
M

Asia Investment & Banking Conference 2019 – HSBC M&A Competition Champions (Axe Capital)

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

Similaire à Asia Investment & Banking Conference 2019 – HSBC M&A Competition Champions (Axe Capital)

Similaire à Asia Investment & Banking Conference 2019 – HSBC M&A Competition Champions (Axe Capital) (20)

Dernier

Dernier (20)

Asia Investment & Banking Conference 2019 – HSBC M&A Competition Champions (Axe Capital)