Valuation of Carlsberg

Christian Blomqvist & Morten Saxild

Student thesis: Master thesis


The main objective of this master’s thesis is to determine a fair value of Carlsberg A/S’ (Carlsberg in the following) equity and hence a fair value of Carlsberg’s stock. Carlsberg is the world's fourthlargest brewery and the company has accomplished large expansions during 2008. The expansions of Carlsberg’s operations were partly financed by a stock emission that raised DKK 30.1 billion and partly by taking on new debt. These changes, in both operations and capital structure, are the main motivation behind this valuation since they have made it difficult for the market to price the Carlsberg stock. The expansions of Carlsberg in 2008 were driven by the acquisition of Scottish & Newcastle. From the acquisition, Carlsberg gained full ownership over Baltic Beverages Holding (BBH in the following), the French leading brewing company; Brasserie Kronenbourg and other breweries in both Western Europe and Asia. At first glance, the expansion appeared sound and profitable, but changes in the global financial markets and economy in general have affected the prospects of Carlsberg operations, especially in Eastern Europe. This has been reflected in the stock price of Carlsberg and our valuation will investigate whether the market has priced the Carlsberg stock fairly or not. The valuation is based upon a thorough strategic analysis in which we have analyzed the macro environment of Carlsberg’s operations and we have applied well-known frameworks and theories such as; Porter’s Five Forces, Product Life Cycles, Boston Consulting Group matrix, Value Chain Analysis - we have complied our results in a SWOT analysis. We have also analyzed Carlsberg’s historic financial performance. We have used a DCF and EVA approach in this valuation. We found the fair value of the Carlsberg stock to be DKK 367 as of April 21st. The observed stock price that specific day was DKK 255 and we therefore recommend investors to buy the stock as it is undervalued by the market. We have stress tested our findings by conducting a sensitivity analysis and we found that our results are very sensitive to changes in the cost of capital. We also applied a multiple-based valuation which led us to accept our findings from the DCF and EVA models.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2009
Number of pages196