Instructions: Complete the Deal Comps Analysis for PaperlinX/CNG, TVC/Wesco, CleanSource/Interline and Corporate
The source documents can be downloaded as a zip file from the course Web site - do NOT rely on secondary sources such as CapIQ or Thomson One Banker Calculate the ratios and valuation multiples. Don't forget to include your footnotes - in the "Notes" tab, not cell comments (which don't print out). You may not be able to find all of the data items for all deals - use "N.Av." in those cases.
0. 9. 3.Av.9 12. = Not Available
38.Av. 1.Av.21 x 0.Av. N.Av.P Sweet Paper Paper and jan/san distribution United Stationers N. 12.P Fabory Group Fasteners and related MRO distributionGrainger N.P. 119.Av.0 70.0 -
59.Av.532. N.P RECO and Brews Supply Electrical components distribution Wesco International N.Av.P Corporate Express N.P CleanSource Jan/San products distribution Interline Brands N.Av.Av. 0.97 x N. N.0 300.16 x 1. N.80 x 10.0
10.0 (1.88 x N.80 x 26. N.98 x 4.Av.195.Av.64 x 0.0 58.
Kelly Paper Company/Spicers Paper (PaperlinX) Paper products distribution Central National-Gottesman N.0 125. N.0 N.0 48.App.0
LTM Net Income
Comparable Deals Analysis
Selected Transactions in the Distribution Industry
Aggregate Amount (in mm) Date Announc ed
6/24/2008 8/30/2007 3/13/2007 12/15/2006 10/28/2006 8/19/2004 2/18/2004 12/20/2003 5/14/2001
Target Financials (in mm)
Equity Enterpris Enterpris Equity Value to e Value e Value Value to
Target Business Description
Offer Price Per Share
Enterpris e Value
76.Av.97 x 0.1 N.P
0.0 125.9 115.1 56.69 x N.1 252.P TVC Communications Infrastructure products for CATV distribution Wesco International N.5 15.44 x 1.0 3. N. N.42 x
LTM Net Income
N. 328.Av.0 284.Av.51 x 0.25 ORS Nasco Wholesale industrial supplies distribution United Stationers N.0 250.5 15.Av.23 x N.V. N.0 48.0 258. N. N.Av.0 358.0 1.62 x 0.Av.5 175.Av.631.Av. 17. N.Av.19 x 0.0 N.583.Av.0
38.0 1.Av.74 x 8.5 54.0 75.0 N.9 32.0 358.Av. 14.0 5.0 19.P Emco Distribution Wholesale office products distribution United Stationers N.50 x
7.1 2.3 N.1 251.Av. Wholesale office products distribution Staples € 7.57 x 0. = Not Public N.Av. N. = Not Applicable N.5 175. N.Av.64 x N.50 x N.663.5) 4.1 N.Av. N.
2011.5x Book value: estimated from source "loss against the carrying value of net assets for the US is US$21m. Book Value estimated from purchase price allocation and assumes that fixed asset writeup was insignificant.Analyst Briefing (22 August 2012) Enterprise Value of $76mil is from press.
United Stationers / Emco Source: United Stationers 2008 10K Staples / Corporate Express Source: Staples Offer Memorandum 19 May 2008 net debt: includes the off-balance commitments LTM EBITDA and net sales: adjusted the extra ordinarily items
United Stationers / ORS Nasco Source: United Stationers Analyst Conference Call 1/9/2008 United Stationers / Sweet Paper Source: United Stationers 2007 10K
. assumed that the repayment of US debt of 38 was a set deal though the debt was not actually assumed to the acquirer. 2011. LTM sales and net income: adjusted from the actual results of 2010 and the pro-forma result. PaperlinX 2012 Full Year Results . LTM sales: discontinued portion of the "North American Results" on Analyst Briefing. Brews Supply transaction completed on October 3.net debt = 38 mil. Net debt of $38mil."
Grainger / Fabory Group Source: Grainger 2011 10K Wesco / RECO and Brews Supply Source: Wesco 2011 10K RECO transaction completed on March 14. RECO and Brews Supply data only provided on a combined basis. 2011 10K LTM sales. Equity value = Entity value . LTM EBITDA: estimated from the given EBITDA multiple of 7.Footnotes
Central National-Gottesman / Kelly Paper Company and Spicers Paper Source: Paperlinx press release (26 June 2012). net income: Unaudited pro forma results of operations of TVC book value: assumed that the intangible asset and the good will was 100% excess value
Interline Brands / CleanSource Source: Interline 2011 10K net debt: PV of the possible earn-out payment. Wesco / TVC Communications Source: Wesco 2010.
Praxis Partners Reference: Chapter 9. Required Deliverable (be prepared to submit) Background Reading: Precedent Acquisitions Analysis.xls . Complete the Precedent Acquisitions Analysis Table. Various source documents provided in a zip file Study Questions 1. and are available from the course folder. Bruner
.Class 4 Tuesday. October 23 Topic: M&A Valuation: Precedent Acquisitions Analysis Materials: Precedent Acquisitions Problem Set File: PreAcqsPS. Note that the required source documents have already been identified and gathered.
744 978 41.063.8 million. buildings and equipment Intangible assets Goodwill Other noncurrent assets Total assets acquired Liabilities Assumed Accounts payable Accrued payroll and benefit costs Other current liabilities Total liabilities assumed Fair value of net assets acquired.183 4. The intangible assets include technology patents of $ 48.938
24.315.316 5. Trad indefinite life and are not being amortized. has been allocated to goodwill. 1.9 Net Income 132.475
252. No residual value is estimated for the intangible assets.3 million amortized over 10 years.4 million and goodwill of $109.475 38.6 million amortized over 10 years.183 158 281.0 17.87
. L.7 million amortized over 15 years and trademarks of $ 7.C. cu $ 20. including intangible assets.487
The excess of the purchase price over the fair value of the net assets acquired.0 6.249 1.9 258. except per share data) 11months 1 months 12 months Net Sales 5.451
ST debt LT debt Cash and cash equivalents net debt
0 0 1.1 Earnings per common share: Basic 3.Wesco 2010.90 252. the book value of the acquired assets are
Wesco 2011 10K: Unaudited pro forma results of operations of TVC Year Ended December 31 2010 (In thousands. including intangible assets
assuming that the amount allocated to the original intangible assets book value are not significant.377 2.475 -1. Management believes the majority of goodwill will be deductible for tax purposes.268 86.2 million.4 17. supplier relationships of $ 9.1 0.313 1. The fair value of intangible assets was estimated by management and the allocation resulted in intangible of $86.455 132 115.442 109.L.929 5. 2011 10K (In thousands) Assets Acquired Cash and cash equivalents Trade accounts receivable Other accounts receivable Inventories Prepaid expenses and other current assets Property.12 Diluted 2.019 29. the book value of the acquired assets a assuming that both of intangiable assets and goodwill are 100% excess value.
he allocation resulted in intangible assets
million amortized over 10 years.862
.8 million. customer relationships of nd trademarks of $ 7.304 quired assets are 56. Trademarks have an
book value of the acquired assets are 143.
7 net income 26.54
13.0 million for the years ended December 31.Interline 2011 10K On October 29. Inc. $4.451 7.9 million and $27.320 2.0 18.1 million was assigned to registered trademarks that are not subject to amortization a the Company believes these intangible assets have indefinite lives.176. Actual Pro-forma CleanSource P/L (mil) 2009 2010 adj.357 22. and net income would have been $29.087.1 29. Recorded goodwill is the result of discounted expected future cash flows not related to identifia assets. 2010 adj 2009 2010 2009 net sales 1.00 58.0 million of acquired intangible assets consists of customer relationships and have a weighted-average useful life of approximately 22 years.6 million and $0. 2010 and Decem 2009.3 1.068.059.540
ST debt LT debt earn-out (fair value) Cash and cash equivalents net debt
This acquisition was treated as a purchase and sale of assets for Federal income tax purposes.1 million for the years ended December 31.8 27. If the acquisition of CleanSource had occurred on December 27.
assuming that the amount allocated to the original intangible assets book value are not significant.9 1. revenue would have been $1.176. 2010 of $18. 2010 through December 31.54 4. respectively.855 9. Accordingly.1 million of acquired intangible assets. respectively.715 6. ("CleanSource") for $54.3 million of goodwill expected to be deductible for tax purposes.1 27.4 116. Interline New Jersey acquired substantially all of the assets and a portion of the liabilities of CleanSource.4 1. the book value of the acquired assets are
Net sales and net income for the year ended December 31. the $22.100 120 63.1 million are included in the Statement of Earnin relating to CleanSource for the period October 29. the book value of the acquired assets a assuming that both of intangiable assets and goodwill are 100% excess value.0 1.5 million in cash over two years.251 17.4 million and $1.026 1.6 1. The remaining $13.183. Of the $17.0
. 2010. 2010 and Decemb 2009. 2010.183.175 54. 2008.1 27.6 million in cash and an earn-out of up to $5.410 2.9 0. Price cash earn-out (fair value) total B/S (k) Accounts receivable Inventory Other current assets Property and equipment Goodwill Intangible assets Other assets Total assets acquired Current liabilities Other liabilities Total liabilities assumed Net assets acquired
0 0 4.189
included in the Statement of Earnings n of CleanSource had occurred on ed December 31. the $22. CleanSource 2010 115. 2010 and December 25.289 cquired assets are 15. ed December 31.3 million of goodwill is ure cash flows not related to identifiable
that are not subject to amortization as quired intangible assets consists of
book value of the acquired assets are 32.00 0 4.1
dingly. 2010 and December 25.
979 167.840 Employee benefit expenses.170 7. value (mil)
# of option X price proceeds 400.227 599.738 2. etc.791) Gross contribution 1.544
total eq.65 0 1.229.327.621 5.840 1.37 0 1.993 899 3.371.59 3.085.15 53.686 5.089 7.055
P/L (mil) Continuing operations: 2007 adj 2007 adj Net sales 5.Ordinary shares offer price / ordinary shares # Ordinary Shares # of newly issued shares (options) # Ordinary Shares + newly issued shares (options) value Option 2003 2003 2004 2005 2006 2007 # of total options # of buyback shares # of newly issued shares
7.381 1.695 188.70 1.674.87 1 <=couldn't find the info on total bond issued 145.838.281.477.40 0 1.327. (883) (883) D&A (97) (97) Costs related to the transfer of defined contribution plans (5) into defined benefit 5 plans Result from disposal of Veenman Germany 10 (10) Restructuring and termination expenses (35) 35 Other operating expenses (629) (629) Operating result 201 231 Repurchase Preference Shares C Other financing expenses (115) (115) Total financing expenses (115) (115) Subsequent result from disposal of operations Result before taxes 86 116 Taxes 3 3 Net result from continuing operations 89 119 EBITDA 298 328
B/S (mil) Assets Non-current assets
.631 5.922 14.563 10.000 6.791) (3.08 0 5.662.695
Preference Shares offer price / ordinary shares # of Preference Shares value
3.430.631 Purchase value of trade goods sold (3.081.234
Bond face value / bond conversion price total bond issued # of newly issued shares (CB) value
1.56 1.901.316 1.25 182.364.220 149. value total eq.
1.Goodwill Software Other intangible assets Property.745 (90) (331) 1.352 498 700 183 12 50 3 1.420 98 82 196 190 350 4 12 2.543 40 1.663
total debt 1.215 3.716 Cash and cash equivalents 50 Non-current assets held 3 for sale net debt 1.446 3.004 2.011 136 22 41 1.799
569 <=if this is a commitment to other company.211
117 19 547 11 23 286 1. then nee
. plant & equipment Net pension asset Deferred tax assets Investments in associates Other non-current assets Total non-current assets Current assets Inventories Trade receivables Prepaid expenses and accrued income Current tax receivable Cash and cash equivalents Non-current assets held for sale Total current assets Total assets Equity and liabilities Equity attributable to equity holders of the Company Issued and paid-in capital Additional paid-in capital Treasury shares Other reserves Accumulated deficit Minority interests Total equity Non-current liabilities Long-term borrowings Deferred tax liabilities Net pension liabilities Provisions Total non-current liabilities Current liabilities Current portion of long-term borrowings Short-term loans and bank overdrafts Trade liabilities Current tax liabilities Current provisions Other current liabilities Total current liabilities Total liabilities Total equity and liabilities Commitments not included in the Balance Sheet
834 <=usually pref. shares as an equity value here since the acquire is buying pre 1.533 comfortable treating this as debt if you guys want to.
.532. shares are treated as liability.1.501. but included pref.
then need to include in net debt calculation
.<= may need to include commitments
ment to other company.
ere since the acquire is buying pref. shares as well.