Financial Strategy & Corporate Control - Case study on Remy Cointreau

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Financial Strategy & Corporate Control - Case study on Remy Cointreau

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Abstract

Remy Cointreau is a French group with the principal activity of producing and distributing wine-based products. It operates under the following segments: Cognac, Liqueurs & Spirits and Champagne. It is present in Europe, America and Asia.

The Group is famous all over the world for the quality of its products and its strategy focusing on top-of the-range. Though the wine and spirits market is very competitive and atomized, Remy Cointreau is ranked among the top 10 in the market.

Remy Cointreau distributes its Cognac under the brand name Remy Martin, VSOP, Accord Royal, Club, Vintage 1988 and Louis X111.

Under Liquors and Spirits, the Group distributes its products under the brand names Cointreau, Metaxa, Mount Gay Rum and Passoa.

The Group also offers a range of champagnes under the brand name Charles Heidsieck and Piper Heidsieck. Their champagnes are marketed in hotels, bars and restaurants. The Group is present in Europe, America and Asia.

The Group distributes its products through two distribution networks - Maxxium in Europe and Asia, and Remy Cointreau in the United States. The aim of the group consists in leaving Maxxium for 2009 to gain in independence.

Introduction of Remy Cointreau
Performance analysis
Shareholders' structure and controlling issue
Valuation analysis
Equity Analysis
M&A analysis
Appendix I Porter 5 forces analysis
Appendix II Value Chain analysis
Appendix III Profitability, liquidity and Capital Structure
Appendix IV Asset Utilization
Appendix V WACC for 10 years period
Appendix VI Future Growth Value vs. Performance

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[...] The entrance of new investors and enlarge of equity may be resulted from the heavy debts Rémy Cointreau carries during recently years. Concerning the controlling issue, Orpar S.A., which is controlled by the Dubreuil family, always owns more than half of the voting rights on Rémy Cointreau. Valuation analysis We calculate WACC based on the following inputs (Appendix We use yield to maturity of 10 years US Gov Bond as the Risk Free Rate. The source of market risk premium from 1999 to 2005 is Associe en Finance. After 2006 we use 4.5 as the market average. [...]

[...] It raised 300 million Euros funds for 5 years with only coupon which is a low rate. M&A analysis From 1998 to 2008, Rémy Cointreau entered into 20 completed M&A deals of these deals Rémy Cointreau (or its subsidiary) played Target and in the rest 3 it played Acquirer. This is a huge number for a not so huge group. The financial year of 1998 started with an announcement of merger of a unit of Rémy Cointreau named Bizac with Palmilord. [...]

[...] Thus we have calculated the FGV/MV versus EVA/Capital of Rémy Cointreau from 2000 to 2008 shown as above. During 2000-2002, with both low FGV and EVA, it was a disappointment for Rémy Cointreau awaiting breakthrough change. In 2003 and 2004, it started to make better performance whereas undervalued by investors. In 2005 and 2006, when investors were aware of its value, Rémy Cointreau faced its own problem with high debts, leave from Maxxium, etc. The figure in 2007 is extreme and does not appear in the chart due to the high amount of indemnity to Maxxium. [...]

[...] In the following years, Rémy Cointreau's strategy stuck to this strategy, and hopefully, it worked. The total financial debt reduced from 870 to 411.9 Million Euros during 2001 to March 2008. Indicative bibliography by Oboulo.com http://www.zaptechnology.com/customers/casestudy-remy.asp http://investing.businessweek.com/research/stocks/private/snapshot.asp?privc apId=877136 http://www.mediabistro.com/prnewser/this-week-on-the-mediabistro-com-job- board-remy-cointreau-disney-publishing-clinton-global-initiative_b36378 http://www.remy-cointreau.com/ http://www.just-drinks.com/companies/remy-cointreau_id43 http://www.marketwatch.com/investing/stock/rco?countrycode=fr http://www.remy-cointreau.com/en/le-groupe/history/key-dates/ http://www.remy-cointreau.com/en/le-groupe/distribution/distribution/ Appendix I Porter 5 forces analysis Appendix II Value Chain analysis Appendix III Profitability, liquidity and Capital Structure (Source: in financials) Appendix IV Asset Utilization (Source: in financials) Appendix V WACC for 10 years period (Source: Associe en Finance) Appendix VI Future Growth Value vs. [...]

[...] The Group distributes its products through two distribution networks Maxxium in Europe and Asia, and Rémy Cointreau in the United States. The aim of the group consists in leaving Maxxium for 2009 to gain independence. In order to describe more in details about Rémy Cointreau, we develop Porter 5 forces analysis as below (see appendix - The threat of substitute products Products are appreciated for their top-of-the-range quality. Clients are experts who are aware of the quality and fond of the brand. [...]

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