Lion Capital and the Blackstone Group Case Solution
The case is all about the valuation of the company Or-angina that the parent company announced to sell, how the investor reacts. The two companies such as Blackstone and lion capital forming a strategic partnership to acquire the target company. As there was a buyout trend in the European equity market, at the same period Lion Capital was going through a bad time because most of its associates left the firm, but still,the lion had a good and deep experience of consumer product industry and reputation (G. Felda Hardymon, Josh Lerner and Ann Leamon, 2021)
In this report, we performed valuation by taking data from the case to know the range of values of Orangina. We performed Discounted cash flow model to value the company independently as well as performed a market multiples approach to know the comparable value in the industry.
. The Lion Capital and Blackstone participated in the bidding and came to the second round but they were in fear to enter in the third round, because they had purposed the upper bound value of their valuation, so they thought that many other firms participate in the next round. So they want the valuation range for bidding.
Why would Lion do a deal with Blackstone
There are several reasons such asboth of the firms partnering because lion capital has a lack of funds, but good experience in the customer product sector, on the other hand, Blackstone has funds but lacks experience in the consumer product industry. As the company highlights of both of the firms signal the need of both companies behind this joint venture.
The lion capital desired to deal with Blackstone because the lion wanted to expand and go beyond the geographical boundaries, and operate in European and American markets. The lion saw the high growth potential in these markets.A lion needs to diversify its portfolio of business to decrease losses and for that, the firm thought Blackstone will be the best option to achieve this goal because Blackstone had a good experience in America and also it is moved to Europe after doing business successfully in America. Blackstone’s biggest competitive advantage is that 100% rely on its large equity. Blackstone is a successful company and earning revenue of approximately 946 million euros, and also secured 3rd position in Europe market. Finally, Blackstone is capable of investing up to $1billion in any company.
Why would Blackstone do one with Lion
The lion capital has strong experience in the consumer product industry as the lion is operating in a consumer-focused industry. Previously the firm goth success because of the combination of some factors such as then-innovative build and buy strategy, so the firm expanded through acquisition. So they possess good knowledge in acquisition processes also would be beneficial for Blackstone.
What does each risk? What can each gain
The lion capital will get benefit as the company is facing operational losses currently it would be able to diversify its business so that geographical risk will be reduced, the firm would also get the benefit of marketing strategy investment as a company need a good marketing strategy. On the other hand, Blackstone will leverage the industry experience and expertise of the lion capital………………
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