Værdiansættelse af CULT A/S: Som en del af Royal Unibrew koncernen

Andreas Thrane Gath & Jens Frederik Lange

Student thesis: Diploma thesis


In a formal press release on 29 June 2018, the intended acquisition of CULT A/S by Royal Unibrew at the price of 350 million Danish Kroner was announced. On 26 September 2018, Royal Unibrew A/S as buyer, and CULT A/S as seller, had completed a sales agreement and a formal application regarding this agreement was sent to the Danish Competition and Consumer Authority (DCCA). Due to the size of the companies and the potential impact the transaction could have on the related markets, the DCCA had to assess the possible impact before approval of the transaction. On 27 February 2019, the DCCA concluded that the merger would not significantly impede effective competition on the RTD (Ready-To-Drink), cider and energy drink markets, and hence the transaction was formally approved.
The initial announcement resulted in an increase of the Royal Unibrew A/S share price, with a market value increase of 474 million Danish Kroner during the week following the press release.
Scientific studies show that mergers and acquisitions create value for the collective share-holders through some combination of cost and revenue synergies, but the extent to which these synergies work is varying. The purpose of this thesis is to assess whether or not the acquisition of CULT A/S justifies the share price increase. This will be done by making strategic and key ratio analyses, in order to prepare a realistic budget for valuation of CULT A/S following the acquisition by Royal Unibrew A/S.
The strategic analysis shows great potential for revenue growth due to access to new potential distribution channels, along with a potential gross margin improvement by insourcing production which is currently performed by a subcontractor in Germany.
The key ratio analysis shows potential for changing CULT A/S’ capital structure by taking in additional external debt to invest in production equipment to support prospective production. The CAPM model was used to assess WACC where a change in the current capital structure to consist of less equity is proposed, resulting in a WACC of 5,75%. The valuation performed shows an enterprise value of 553 million Danish Kroner, which is 203 million Danish Kroner above the transaction price. The valuation therefore supports the increase in market value of Royal Unibrew A/S. Whether this is an over evaluation of the potential value of CULT A/S compared to the transaction price has not been concluded as this is subject to a great deal of subjectivity related to factors such as WACC, terminal growth and more. A sensitivity analysis was performed relating to these factors but did not lead to further conclusions.

EducationsGraduate Diploma in Accounting and Financial Management, (Diploma Programme) Final Thesis
Publication date2020
Number of pages85