Nestlè and Alcon: “the value of a listing”

Group 9Yu Yu Gao

Yi Ling SunMarta Caccamo

Marta CenniFlavia Assogna

Wei LiuDaniele Corti

Vito Margiotta

World’s

NUMBER ONE

food company (2000)

WE ARE HERE TO TALK ABOUT

Alcon = 5.9% of Nestlé Group Total Asset

• Half of sales outside USA• Phantom stock program• Expectation of STRONG growth• 12% of EBIT of Nestlé Group

• Alcon Enterprise Value?

• Acquired in 1977• World leading ophthalmology

company

Some good reasons why Alcon

should go alone..

- Company’s value is underestimated. - Increase the overall understanding of company’s business (especially in terms of financial forecasting accuracy)

- Enhance company liquidity.

Part1 of 2

Financial Reasons

See note for an in-depth explanation and additional reasons.

Part2 of 2

- Target and attract specialty pharmaceutical investors.

- Focus and leverage on Nestlé core business. - Eager company strategy planning process.

- Decrease agency problems by implementing a managerial stock option plan.

Managerial Reasons

See note for an in-depth explanation and additional reasons.

Enterprise Value, million USD

Total EV Added = 7.300 Million USD = 7.49%

NOTE: See appendix for further clarification.

97500

SUGGESTED

IPO

ALTERNATIVES FOR AN

IPO

• Swiss market size scarcity of liquidity poor visibility____

• Few large Institutional Investors expert in Ophtalmology

• More than half operations and sales are in the U.S.

• Simple to implement no legal adjustments • Low administrative costs same reporting schedules and investors’announcements

1) SWISS LISTING

SW

ISS L

ISTIN

G

• Attract U.S. Investors Liquidity Availability

• Closer to headquarter, R&D centre and primary market

• More visibility

• No more royalty deductions

• High costs for reorganization

• Duplication of administrative costs

•New name Alcon Inc.•New American style board

•GAAP Reporting•Dividends in $•List on NYSE

•Conversion of employees compensation plans in stock options

NOTE:Being

perceived as foreigner it is

not recommended.

CONDITIONS:

2) U.S. LISTING

DU

AL

LIS

TIN

G3) DUAL LISTING

•Expensive procedure- Issuing Cost_____

- Different Accounting Systems_____

•Inconsistent Security Laws

•Flawback Effect.

• Acheive investors of both Swiss and US, provide the biggest market among the four listing method

• Be able to target the specialty pharmaceutical investor

4) ADR

•Attract international diversified funds instead of the specialty pharmaceutical investors•Be recognised as a foreign company•For issuing shares(Level 3), face strict requirment adhere to direct list•Not good choice for trade in secondary market

•Time lag•Higher commission

• Be Familar with most US instituional investor. Can target sizeable American

capital market.

•Less requirement than direct issuing.

•Easy to trade for investors.

THE FINAL PLAN

USA LISTING

See note

Q&A

APPENDIX

BEFORE BREAKING DOWN

EBITDA EV/EBITDA Multiple Value

Nestle - Alcon6957.87 a

12.72588540

Alcon 704.13 b 12.725 8960

Total 7662 12.725 97500

Company%F&B

IndustryEV/EBITDA

Multiples

Cambell 91% 11.02

GeneralMills 100% 18.94

Heinz 100% 10.38

Kellog 100% 11.14

Kraft 100% 5.01

F&B Average 11.30

Company% Pharma industry

EV/EBITDA Multiples

Allergan 63% 22.41

King 86% 24.48

Teva 88% 18.63

Forest 100% 31.47

Pharma Average 24.25

Schweppes is not chosen because of its low involvement in F&B industry. Danone and Unilevel are not included due to incomplete data.

Allergan is not considered because of its low involvement in Pharma industry.

BREAK DOWN

EBITDA EV/EBITDA Multiple Value

Nestle F&B 6957.87 11.30 78624

Alcon 704.13 24.25 17075.15

L'Oreal _ - 9100a

Total - - 104800

AFTER BREAKING DOWN