Coca-Cola LBO Approach May Be Worth $90/Shr, Nomura Says
2014-10-29 11:43:01.372 GMT
By Heather Burke
Oct. 29 (Bloomberg) -- Coca-Cola’s initiatives announced
last wk are moving in right direction, needs to accelerate,
Nomura says in note; an LBO may have some attraction.
* Reiterates buy, raises PT to $54 vs $51.50 (~33% upside)
* LBO approach possible if co. doesn’t quickly implement plans
to improve margins
* An LBO could more “aggressively” address value creation,
and could value co. at $90/shr, more than rationalize paying
25% premium on current stock price
* Nomura’s analysis of finance structure for LBO finds
estimated FCF for equity investment in “New Coke” under an
LBO (which they estimate at $50b) would be more than FCF
currently earned by KO shareholders
* NOTE: Coca-Cola fell 6% on Oct. 21 as co. said sees yr EPS
below L-T target; cost-cutting plan fails to placate
investors
* NOTE: Oct. 2, Warren Buffett (largest holder with 9.1%
stake) said Coke’s new plan make a lot of sense, still feels
good about KO investment
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To contact the reporter on this story:
Heather Burke in London at +44-20-7673-2044 or
hburke2@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net
2014-10-29 11:43:01.372 GMT
By Heather Burke
Oct. 29 (Bloomberg) -- Coca-Cola’s initiatives announced
last wk are moving in right direction, needs to accelerate,
Nomura says in note; an LBO may have some attraction.
* Reiterates buy, raises PT to $54 vs $51.50 (~33% upside)
* LBO approach possible if co. doesn’t quickly implement plans
to improve margins
* An LBO could more “aggressively” address value creation,
and could value co. at $90/shr, more than rationalize paying
25% premium on current stock price
* Nomura’s analysis of finance structure for LBO finds
estimated FCF for equity investment in “New Coke” under an
LBO (which they estimate at $50b) would be more than FCF
currently earned by KO shareholders
* NOTE: Coca-Cola fell 6% on Oct. 21 as co. said sees yr EPS
below L-T target; cost-cutting plan fails to placate
investors
* NOTE: Oct. 2, Warren Buffett (largest holder with 9.1%
stake) said Coke’s new plan make a lot of sense, still feels
good about KO investment
For Related News and Information:
First Word scrolling panel: FIRST<GO>
First Word newswire: NH BFW<GO>
To contact the reporter on this story:
Heather Burke in London at +44-20-7673-2044 or
hburke2@bloomberg.net
To contact the editor responsible for this story:
James Ludden at +44-20-7673-2645 or
jludden@bloomberg.net