At three in the morning, September 10, 2001, Thierry Hautillac, risk arbitrageur, learns about the final agreement between the Pinault-Printemps-Redoute SA ("PPR") and LVMH Mo t Hennessy Louis Vuitton SA ("LVMH"). After the competition to manage Gucci more than two years, PPR has won. LVMH and PPR PPR agreed to buy half of the shares in LVMH Gucci for $ 94 per share, Gucci pay extraordinary dividend of $ 7 per share, and for the PPR, to give the two a year put option with a price tag of $ 101.50 to the public shareholders Gucci. The main task for the student in this case, recommend a course of action for Hautillac: it must sell its 2% stake in Gucci, when the market opens, continue to hold their shares or buy more shares? The student must assess the risk arbitrage returns from each of these options. The basis for this decision, the student should appreciate the payment terms, and believe that the share price Gucci will do to the market open. The student must determine the intrinsic value of Gucci with a model DCF, as well as information on equal firms and transactions. The student should consider the potential interaction between Gucci and PPR and between Gucci and LVMH. The student must assess the likelihood of a higher bid, using the analysis of changes in the prices of earlier events in the competition for the key.
This Darden study. "Hide
by Robert F. Bruner, Laurie Simon Hodrick, Sean Carr Source: Darden School of Business 53 pages. Publication Date: August 11, 2005. Prod. #: UV1364-PDF-ENG
Related Case Solutions & Analyses:
Bandyworks (B): Tom Bandy-Growing Letting Go
Fisk Alloy Wire and Percon
Microsofts Unlimited Potential (B)
Clear Communications Ltd. vs. Telecom Corp. of New Zealand Ltd. (A)
Cisco
VENTURE CAPITAL/PRIVATE EQUITY FINANCING ASSIGNMENT
DOW’S BID FOR ROHM AND HAAS
Case Analysis: Strategic Leadership at Coca Cola: The Real Thing
British Satellite Broadcasting versus Sky Television
Nestle
