Lyonnaise des Eaux-Dumez

his case describes the acquisition of Dumez by Lyonnaise des Eaux in 1990. The case is written from the point of view of Suez, a French holding company that is also the most important shareholder of Lyonnaise. As a holding company it is supposed to verify that Lyonnaise does not pay too much for Dumez and that the acquisition makes sense.

he case is used to illustrate the Discounted Cash Flow method in valuing acquisition targets. It highlights the difference between value creation and earnings/sales maximisation by showing how maximising earnings per share and maximising sales are incompatible with value creation.