MINICASE. INDUGAYALSA. Invesment in Latin America

The Spanish company Industria de la Gasa y el Algodón, s.a. (INDUGAYALSA) had been selling in the Spanish healthcare market for 30 years. The company was considering going to the secondary stock market, for which it was necessary to demonstrate future growth potential to improve the expected discounted Cash flows. The domestic market was flat, since there was a single European market with a lot of competitors and with the removal of import duties to Chinese gauze, prices had been falling in public tenders, to the point that some competitors went bankrupt because they were not efficient enough. Taking advantage of this occasion, Industrias de la Gasa y el Algodón (INDUGAYALSA) bought a competitor in Catalonia, increasing its presence in the local market. The company is now considering a purchase of another company in Latin America, which would provide immediate growth, but with many potential problems.