Fransiska Silaban
Ratu Hasanah Semarini
Timkken Company
INTRODUCTION
Tahun
2002
Timken
mempertimbangkan
mengakuisisi the Torrington Company dari Ingersoll
Rand.
Potensi penghematan biaya tahunan Timken dari
akuisisi ini diperkirakan $80 juta.
Apabila harga akuisisi yang dibayarkan terlalu tinggi,
maka Ingersoll-Rand akan memperoleh nilai sinergi.
Apabila
akuisisi
yang
dilakukan
Timken
menggunakan utang baru, maka grade rating
investasi Timken akan mengalami downgrade
SALES 2002
EMPLOYEE 2002
US$4,8 miliar
39.000
Swedia
22.000
Tokyo, Jepang
18.000
Canton-Ohio, US
US$3,62 miliar
US$2,55 miliar
BASIS AREA
Ingersoll-Rand
MERGED
25 % of consolidated
sales
27 % of consolidated
sales
15 % of consolidated
sales
33 % of consolidated
sales
17% of income
among all segments
28 % of income
among all segments
43 % of income
among all segments
22 % of income
among all segments
10.500 karyawan
27 pabrik
2002
Revenues : $1,204 bio
Operating income : $85,2 mio
2007
Revenues : $1,65 bio
Operating Income : $116,7
Timken
2002: companywide restructure
Berencana menambah produk baru ke
dalam portofolio bundling
CASE QUESTION
1. How does Torrington fit with the Timken Company? What are the expected
synergies?
2. What is your stand-alone valuation of Torrington? Be prepared to explain and
justify all the major assumptions used in your estimate.
3. What is your with-synergies valuation of Torrington? Be prepared to explain
and justify all the major assumptions used in your estimate.
4. Should Timken be concerned about losing its investment-grade rating? How
do Timkens financial ratios compare with those of other industrial firms in
2002? How would those ratios change if Timken borrowed $800 million, for
example, to buy Torrington?
5. If Timken decides to go forward with the acquisition, how should Timken offer
to structure the deal? Is Ingersoll-Rand likely to want a cash deal or a stockfor-stock deal?
6. What are the risks for Ingersoll-Rand of accepting Timken shares for some or
all of the consideration?
Synergies
Pemain terbesar ke 3
Meningkatnya value added kepuasan
pelanggan
Penghematan biaya tahunan $80 juta
Market share Timken 7% 11%
Utilisasi jaringan distribusi Timken
Cost of funds
Weighting
Weighting Cost
Debt (462,20)
4.35%
0.30
1.31%
Equity (1,065.12)
10%
0.70
7.31%
WACC
8.62%
2002
2003
2004
2005
Net sales
1204
1282
1,365
1,454
84
90
96
1,107
1,179
1,255
91
97
(175)
Depreciation Expense
80
Operating expense
1,039
Operating Income
85
Capital Expenditure
( 41)
Tax Expense
(34)
2006
2007
1,549
102
1,649.2
108.5
1,337
1,424.0
103
110
116.70
(130)
(140)
(150)
(160.0)
(36)
(39)
(41)
(44)
(46.5)
changing in WC
(8.14)
(9)
(9)
(10)
(10.5)
(44.4)
9.4
8.6
8.0
8.2
Total
` (44)
183.7
8
192
2002
2003
2004
2005
2006
40
50
60
70
80
24.5
30.06
36.07
42.08
48.09
Perpetuity Value
557.95
Integration Cost
(65.00)
(65.00)
CF
(40.95)
(34.94)
2007
36.07
42.08
$391.89
Asumsi :
1)Tarif pajak tidak berubah sejak tahun 2012 (39.88%)
2)Cost saving terus meningkat hingga tahun 2007 mencapai US$ 80 juta,
setelah itu cost saving diperkirakan konstan3
3)WACC :8.62%
606.04
Financial Ratio
Bearing Companies
Kaydo
n
NN Inc
Timke
n
Commer
cial
Metal
Usa
Mueller
Industries
Quane
x
Corp.
Worthington
Ind.
EPS
0.84
0.16
1.70
1.34
1.61
2.35
5.26
1.83
2.48
PE
23.86
59.96
9.88
13.39
0.00
11.02
4.12
18.94
7.53
15%
10%
6%
0%
13%
18%
13%
9%
EBITDA/
Sales
%
21.50
%
Proforma
Before
2002
DCR 43.09%
DCR
43.09
%
After
7%
62,73%
Adding EFN
with Equity
$777.23
11%
62,67%
Adding EFN
with Equity
$792.99
45.24%
44.95%
Financial ratio
Liquidity
Ratio
Current
Ratio
Quick
Ratio
2002- 20022002 7%
11%
Cash Ratio
Working
Capital
1.53 1.54
1.55
0.76 0.76
0.77
0.13 0.13
0.13
Financial ratio
Leverage
Ratios
2002- 20022002 7%
11%
Total Debt To
Assets
0.09
0.04
0.04
Debt-Equity
Ratio
0.32
0.10
0.10
Equity
Multiplier
3.50
2.55
2.55
NPV Torington
cash Acquisition
Net sales
Operating
income
Sales growth
1999
2000
2001
2002
2003E
2004E
2005E
2006E
2007E
$1,239.50
$1,161.00
$1,004.30
$1,204.00
$1,282.00
$1,365.30
$1,454.10
$1,548.60
$1,649.20
$ 145.70
$ 172.60
$ 102.90
$ 109.50
$ 116.70
-6.3%
13.5%
19.9%
6.5%
6.5%
6.5%
6.5%
6.5%
78.00
85.20
90.70
96.60
Operating
margin
Capital
expenditures
11.8%
14.9%
7.8%
7.1%
7.1%
7.1%
7.1%
7.1%
7.1%
84.00
85.00
45.00
41.00
$ 175.00
$ 130.00
$ 140.00
$ 150.00
$ 160.00
Depreciation
expense
OCF
75.00
77.00
79.00
80.00
90.00
96.00
$ 102.00
$ 108.50
56.60
58.90
61.50
65.20
47.97
45.96
44.18
43.12
Initial Outlay
$
(130.00)
$ 181.14
NPV
84.20
$
(0.10)
$
(0.09)
51.14
6. What are the risks for Ingersoll-Rand of accepting Timken shares for
some or all of the consideration?
TERIMA KASIH