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Business Combination

In: Business and Management

Submitted By hajarina
Words 337
Pages 2
Università di Torino Facoltà di Economia Course of Business Combination

November 2012

Exercise 1

Question and Assumptions

• Please estimate the Enterprise Value (EV) of “Company Alpha” (total and per share) by applying the market comparables on page 3.

• Main Financial Data of “Company Alpha” – EBITDA per Share 2013: €4.40 – EBITDA per Share 2014: €5.70 – Sales per Share 2013: €18.10 – Sales per Share 2014: €22.20 – Total Shares Outstanding: 8,250,000


Exercise 1 (cont’d)

Note 1. Global luxury/brands average excludes Brunello Cucinelli, Hermes, Michael Kors, Prada and Salvatore Ferragamo


Exercise 2

Question and Assumptions

• Based on the assumptions below and on key financials of page 5: - Please estimate the NPV as of 1 Jan 2012 of the Cash Flows in 2012, 2013 and 2014, including the Terminal Value

• Main Assumptions – WACC: 10% – Terminal Multiple on Cash Flow: 5x – Capital Expenditure 2012: €0 MM – Capital Expenditure 2013: €130 MM – Capital Expenditure 2014: €0 MM


Exercise 2 (cont’d)

Key Financials
€MM 2012E 2013E 2014E





Operating Expenses













Exercise 3

Question and Assumptions

• Based on the assumptions below for a merger transaction and on the key financials reported on page 8: – What is the Acquirer’s 2013 EPS accretion/ dilution in the event of a transaction 60% in shares and 40% in cash (financed by debt) assuming a 25% premium on market capitalization?

• Main assumptions – Premium on market capitalization: 25% – Pre-tax market cost of debt: 6.0% – Tax rate: 32% – No synergies – No integration costs


Exercise 3 (cont’d)

2011A 2012E 2013E 2014E

No. of Shares Outstanding (MM)


Share Price (€)


EPS (€)




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