Companhia Brasileira de Distribução

: a potential M&A target for Koninklijke Ahold Delhaize

Abstract

In an environment where performance metrics reward fast-growing figures, companies should be aware of all the expansion opportunities that may arise. The purpose of this thesis is to evaluate the potential cross-border merger or acquisition between Koninklijke Ahold Delhaize (Ahold Delhaize) and Companhia Brasileira de Distribução. Literature will be reviewed to suggest the best transaction methods, financing, and valuation models. Furthermore, the market will be analysed to provide an overview of the current and expected trends, recommending the best strategies to foster inorganic growth. The assessment of the Food and Grocery Retail (F&GR) and Online Retail (OR) industries will indicate South America as the most promisingregion. The segmentation and competition of this macroeconomic landscape will be examined to evaluate Ahold Delhaize’s entry in the new market. The two companies’ business model, strategy and performance will be explored, and their value computed through the Discounted Cash Flow and the Relative Valuation approaches. The output will show the firms’ intrinsic value, suggesting whether to sell, hold or buy their stock. In order to estimate the stand-alone business, the target’s financial statements will be standardized through the Purchasing Power Parity model. Comparable deals as well as industry medians will be employed to determine synergies and acquisition fees. This, in turn, will be adopted to define the transaction price range and the proper premium to be paid. Finally, the deal’s limitations and main conclusions will be presented, together with potential alternative targets.

Date of Award	29 Jun 2022
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	António Borges de Assunção (Supervisor)