Pepsi in Cuba

5. How taking to PepsiCo is the proposal to buy 30% of Deltex for 1.1B pesos (US$360M)? Based on the information in the display case, Pepsi could beautify US$360 million in exchange for 30% equity of Deltex. So we pull in to fancy the value of 30% equity of Deltex. First, we calculated the discount ingredient by using average unlevered beta of US independent bottlers, US 10 year Treasury bond as peril free rate and assuming market risk premium 10%. We came up with 9.83% of WACC. Next, we calculated Deltex free bullion flow and terminal value and then converted them into US dollar value. Now with WACC and total cash flow, we had NPV of the company. So we deducted contemporary debt from NPV and came up with the value of US$360M investment equal to 59.99% of Deltex equity. So the proposal to buy 30% of Deltex with US$360M is too pricey to PepsiCo and not attractive to PepsiCo. If we look at the sensitivity analysis, we align as WACC increases, the percentage of US$360M investment in Deltex too increases. When WACC is 5.8%, the percentage of US$360M investment in Deltex is equal to 30% equity of Deltex. WACCPercentage of Equity 4%19.35% 6%31.35% 8%45.25% 10%61.44% 12%80.39% 14%102.69% 16%129.18% 18%160.96% 6.

As Suarez, would you invest in the Sanchez/ Deltex joint venture as proposed in the case? Why or why not? Can you imply a joint venture arrangement that is more attractive to both PepsiCo and Deltex? In deciding whether to invest in Deltex, we have to consider some advantages and disadvantages of this deal first. Advantages and Opportunities for Pepsi a.Pepsi needed a watertight regional partner. Pepsi had been falling behind to Coke in Mexican market. However, changes in the regulatory environment had cut Cokes advantage and would provide Pepsi an opportunity to catch up with Coke. Deltex has showed dependable performances in previous years. It had increased its market share to roughly 50% in each of its regional markets and remained highly... If you want to involve a full essay, order it on our website: Ordercustompaper.com

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