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Value Capture

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29 views

Value Capture

Uploaded by

bpsc08
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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© 2002 Corporate Executive Board

Value Capture Summary

Pinpointing the Sources of Value


Value Capture Summary
Monsanto, Hypothetical

Value Capture Summary—Tennyson Seeds*


While the VCS includes …long-term value
the short-term operational I. Strategic Rationale capture requires the
• Access to elite germplasm that will increase capability for gene sequencing
objectives traditionally linkage of strategic
• Reduction of product development time and time to market
considered the focus of • Access to European seed market objectives to specific
integration activities… milestones in order to
II. Deal Terms keep the team focused
• Monsanto will purchase 55 percent of Tennyson Seeds for $600 million cash beyond the realization
• Monsanto retains an option to purchase the remaining 45 percent of Tennyson,
of initial cost synergies
with stock or cash, on or before December 31, 2001
III. Deal Participants
• Bob Smith, Sarah Jones, David Bloggs
IV. Financial Targets
• Financial projections based on combined figures for Monsanto’s Life Sciences unit and Tennyson Seeds
1999 2000 2001 2002
Revenues $3,100 $3,565 $4,171 $4,963
SG&A $988 $1,047 $1,110 $1,224
Managing for Value
R&D Expenses $248 $260 $273 $287 • Developed by the
Transformation Team and
Net Income $140 $153 $171 $191 the deal sponsor at the due
(Dollars in Millions) diligence stage
V. Milestones • Intended to hold people
• Reduce product time to market by 30 percent over three years accountable during
• Increase number of patented gene sequences by 30 percent over three years integration and focus
• Increase the number of cross-licensing agreements of patented traits by 20 percent over six years activity on value drivers
• Increase the number of hybrid development projects by 10 percent over five years
• Transformation Team and
Integration Leader present
VI. Operational Objectives
to Board twice a year
• Reduce non-scientist headcount by 250
• Increase sales force by 15 percent • Updates are made
• Achieve 3 percent savings in laboratory equipment procurement electronically and senior
VII. Integration Leadership and Plan executives can view at will

* Hypothetical Company.
Source: Monsanto; Corporate Strategy Board research.
107

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