Acquisi'on

Calcula'ons:
1) 2) 3) 4) Value of Firm Acquirer (INDEPENDENTLY) Value of Firm Target (INDEPENDENTLY) Value of combined rm (without synergies) Value of combined rm (with synergies)

Things to note: Growth rates in dierent circumstances.

First 10 years
Growth: 25% Beta: 1.45

Terminal Value
Growth: 6% Beta: 1.10 FCFn WACC - g

Ainsworth run a gamble

B. Refer two lecture examples + workshop 1) Trend in share price 2) InformaIon provided (i.e., high, Low, 1 year return: +150.4%) 4) RecommendaIon: Majority HOLD 5) Reasons for recommendaIon? 6) PEG calculaIon vs. current trading price Other theories knowledge: If the analysts do not think its the growth is conInuing, why is that a hold NOT sell recommendaIon? Are analysts forecast accurate? What are the other poten)al models to determine whether it is under or over priced. Present Value models Residual earnings? (arIcles on Bradshaw (2004))