http://www.casetutors.com/8610/RJR-Nabisco.htmlRJR NabiscoCase ID - 289056 Solution ID - 8610 1407 WordsAbstractRJR Nabisco a company operating in food and tobacco businesses is considering proposals of purchase. The best bid has to be identified for which the company has to be valued in three different operating plans; the current operating plan and two proposed plans by bidding groups; the Management Group and KKR. The Discounted Cash Flow (DCF) method has been emplo ...view middle of the document...
The Capital Asset Pricing model (CAPM) has been used to calculate the cost of equity. It has been concluded based on the DCF analysis and general information given in the case that bidding offer by KKR is the best proposal for RJR Nabisco.Excel SheetPrebid operating strategy, MG operating strategy, KKR operating strategyCalculating present value of cash flows 1989-1998Calculating terminal valueGrand NPVCalulating Weighted Average Cost of Capital (WACC)Calculating Cost of EquityCalculating Cost of DebtWACCTotal Value of RJR NabiscoPer share valueQuestions Covered1. What was the value of RJR Nabisco under:a) the pre-bid operating strategy?b) the Management Group's operating strategy?c) KKR's operating strategy?You need to conduct detailed valuation using the information given in the exhibits for each strategy and general information in the case2. What accounts for any difference in the value of the three operating plans?3. Evaluate the Special Committee's use of an auction of RJR Nabisco?4. Which bid should the Special Committee select, if any? What other actions should the Special Committee take?KeywordsLeveraged buyouts, ValuationStatusAvailableThis case solution is ready. You can download it immediately after purchasing. Download link will be sent in payment comfirmation email.Download Solution in 2 Minutes