Course participants will work through a case treating the privatization and initial public offering undertaken by Deutsche Telekom in 1996. Emphasis will be placed upon the underwriting process and the pricing of an offering for domestic and international distribution.

The Deutsche Telekom Case Study (instructions for pre-reading)

Please read the case study, "Deutsche Telekom," and try to answer the

following questions:

• What price does the case say an investor would pay for a share of Deutsche Telekom? The underwriters?
• What is the "book value" per share of Deutsche Telekom?
• What alternative valuation methods could be used to figure out the company's value?
• How would an underwriter set the price?
• What risk would an investor face?
• What risk does the underwriter face?

Bringing a Deal to Market

• How Do Investment Banks Compete for Securities
• Business?
• Consolidation in the Market
• The Importance of Origination, Distribution and Research
• Implication of the League Tables
• Bond Underwriting in the U.S.
• Award of a Mandate: "The Beauty Contest"
• Selection of a Lead Manager(s); Co-Managers
• Putting Together a Syndicate and the Question of the Fee Structure
• Finding Consensus Among Underwriters
• Designating a Bookrunner
• Due Diligence and Preparation of the Offering Circular
• Financial and Practical Issues (eg. Form of Securities, Clearance and Settlement, Listing)
• The "Road Show"
• Pricing Risk:
• Investment Grade Securities
• High-Yield Debt
• Emerging Market Risk
• Maintaining Discipline in the Syndicate
• Example: Selling High-Yield Debt
• Private Placements and 144A Compared to the Yankee Market
• Equity Underwriting vs. Debt
• ADRs and 144A
• Registered Public Offerings

• Valuation in Securities Underwriting
• Bonds, Equities and Hybrids
• IPOs and Privatizations
• Valuation in Mergers, Acquisitions, and Divestitures
• Approaches to Valuation
• Book value approach
• Market value approach
• Ratios, such as P/E ratio
• Break-up value
• Cash flow value
• Examples

Ian Giddy
ian.giddy@nyu.edu
http://giddy.org