Analysis of Olvi Oyj as a Potential Acquisition Target: Valuation

Aron Kjartansson & Sindri Sigurthorsson

Student thesis: Master thesis


The purpose of this thesis is to analyse the potential of Olvi Oyj as an acquisition target for Royal Unibrew A/S. The price of the acquisition target is one of the most important factor to consider in order to assess the attractiveness of Olvi as an acquisition target and is therefore the main focus of the this thesis. The thesis is limited in the sense that it ignores the potential synergy effects when two firms merge. In recent years the brewery industry has gone through substantial consolidation with increased number of large mergers and acquisitions. This trend provided a motive to create a hypothetical business case for an acquisition in the brewing industry. The acquisition target, Olvi, is a Finnish brewery which has operations in Finland, the Baltics and Belarus with total revenue of around 330m EUR in 2014. Olvi´s product groups ranges from ciders and long drinks to juices, energy drinks and mineral waters but the two main product groups are beer and soft drinks. The valuation is based on a financial and strategic analysis where the macro and micro environment of Olvi is analysed in order to determine future growth opportunities, identify risks and determine the value drivers. The results from the previously mentioned chapters was the foundation for forecasting the future profitability and activity level of Olvi. Using the discounted cash flow model our estimated market price of Olvi is 23.62 EUR per share where the observed market price for the cut-off date was 20.4 EUR per share suggesting that Olvi´s stock price is undervalued. Due to numerous assumptions and estimates in the valuation model it was decided to support our main results with two different forecasting scenarios as well as a sensitivity analysis for our weighted average cost of capital.

EducationsMSc in Applied Economics and Finance, (Graduate Programme) Final Thesis
Publication date2016
Number of pages118