Open AccessValuation in Multifinance Acquisition by Bank MDR: A Case Study
Author(s) -
Jiwo Sukarno,
Tedy Fardiansyah
Publication year - 2009
Publication title -
journal of applied finance and accounting/journal of applied finance and accounting
Language(s) - English
Resource type - Journals
eISSN - 2746-6019
pISSN - 1979-6862
DOI - 10.21512/jafa.v1i2.127
Subject(s) - valuation (finance) , pace , business , loan , revenue , finance , shareholder , corporate finance , economics , corporate governance , geodesy , geography
Bank MDR as one of leading banks in Indonesia, aims to capture 20 to 30% of revenue share in each of their businesses, including Consumer Finance. One crucial sub-segment in Consumer Finance Business is Automotive Loan, which currently dominated by Multifinance companies. To increase the pace of becoming dominant in Automotive Loan, ”inorganic initiatives” are required to supplement the organic efforts to grow the revenue shares of Bank MDR. In early 2009, Bank MDR engages in inorganic investment by acquiring a multifinance company, Tunas Finance. The main purpose of this study is to examine an alternative approach to value an acquisition of a multifinance company, as well as to observe whether the acquisition done by Bank MDR is creating value for its shareholders. Valuation of an acquisition is not fundamentally different from valuation of any firm, however, valuing a multifinance company poses particular challenges. Given that Bank MDR has announced that it would pay 290 billion rupiahs for 51% shares of Tunas Finance, this study, following Excess Return Model Valuation (Damodaran, 2002), shows results that acquirer shareholders still earn positive value from the acquisition.