M&A valuations are worthless?

In Humour on 26/07/2012 at 10:03 am

No it’s an art form! Like Ravi’s performance at Hong Leong Green last Sunday. Err I think. I’d better explain.

Reuters, citing unidentified people with knowledge of the matter, reports: “Japan’s Kirin Holdings Ltd has hired Deutsche Bank to examine all options as it prepares to defend its interest in Singapore conglomerate Fraser and Neave.” Kirin has 15% of F&N, the second largest shareholder. (The largest shareholder was OCBC Bank who agreed to sell to cos connected to ThaiBev.)

And with Goldman Sachs being appointed to advise F&N, it’s feeding time for investment banks.

One of the skills they are supposed to bring to the table is how to value a deal. So this is funny: Citi and Morgan Stanley are in negotiations for Morgan Stanley to boost its controlling stake in their wealth management joint venture by 14% to 65%. But their valuations for the business are US$13.5 billion apart.

Sounds irrational, but there are gd sound technical reasons. I kid you not.


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