Tiger Airways: Buyout Offer from Singapore International Airlines
(3 pages of text)
Case (Pub Mat)
In January of 2016, Singapore International Airlines Group (SIA) announced that it had secured more than 90 per cent stake in Tiger Airways Holdings Limited (Tigerair), and would take Tigerair private. Once the buyout offer closed on February 19, trading in Tigerair’s shares would be suspended because the free float had fallen below the minimum 10 per cent threshold. Tigerair had been suffering losses amounting to more than SG$600 million from 2012 to 2015. When SIA initiated the buyout offer, Tigerair’s shareholders wanted to use the discounted cash flow model, the discounted dividend model, and relative valuation to determine whether the buyout was a fair deal.
This case can be used to study comprehensive valuation in an advanced undergraduate or MBA course in corporate finance or financial management. The case presents opportunities for students to
- compute the weighted average cost of capital;
- undertake a discounted cash flow valuation of a company, and perform sensitivity/scenario analysis on some of the assumptions;
- apply the discounted dividend model; and
- conduct a relative valuation analysis using various peer multiple methods.
Transportation and Warehousing
Singapore, Large, 2016
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