I think the valuation of the Eskimo Pie Corporation by Nestle and Goldman Sachs was based on its performance in the industry by comparing the sales that it had made over the years of operation. I also think that the valuation was aimed at evaluating the key players of the corporation and the revenue that it generates to the members to determine its effectiveness. I would go about valuing it as a standalone business by comparing the revenue that it generate to the entire costs of running it. I would also consider shareholders of the corporation and the shares they hold to help in determining their contribution to the performance of the company. I would also consider the volume of sales that the firm had in previous years to help in giving the exact value of the firm.
Nestle would want to acquire Eskimo pie to consolidate its business of ice cream novelties. Eskimo Pie has been among the key competitors that Nestles has been facing and buying it would lead to improved performance of Nestle in the industry. Eliminating the independence that Eskimo Pie has would help Nestle to remain viable and competitive in the industry and there exist potential synergies. In my view, Eskimo Pie worth more when operating alone because it would have the ability and potential of maintaining its independence. It would be hard for the corporation to retain its independence ,including workers if another company or corporation acquires it.
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The Eskimo Pie Corporation has been having a small percentage of the revenue that Reynolds has been getting. Selling the corporation would increase the performance of the other investments that the Reynolds has. I would advise the owner to sell it so as to increase returns from the aluminum company that he has. Selling the corporation would help the shareholders to concentrate more on the other investments that have higher earnings.
