Raffles Holdings Limited: Valuation of a Divestiture

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Case

Reference no. 113-056-1

Subject category: Finance, Accounting and Control

Authors: Siriwan Chutikamoltham (Nanyang Business School (NTU)); Wilfred Chua (Nanyang Business School (NTU))

Published by: Asian Business Case Centre

Originally published in: 2013

Version: 29 July 2013

Length: 21 pages

Data source: Published sources

Topics: Suitable techniques to use in valuing a going-concern; Assumptions behind the cash flow projection; Intangible aspect of valuation; Strategic direction

Share a link: https://casecent.re/p/118457

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Abstract

In 2005, CapitaLand announced the sale of the hotel business under its subsidiary Raffles Holdings Limited for US$1.45 billion. This included the sale of landmark Raffles Hotel as well as 40 other hotels, including the Swissotel international hotel chain. The case focuses on the financial and strategic aspects of the sale from the perspective of CapitaLand and includes the following: What should be an appropriate valuation for Raffles Holdings? How should the value of intangible assets such as brand name be incorporated? Was there strategic justification for CapitaLand to pursue a divestiture that would translate into loss of the iconic Raffles Hotel - a national monument of Singapore?

Location:

Singapore

Industry:

Hospitality, tourism

Other setting(s):

2005