Professional Documents
Culture Documents
Table of Contents
1. Executive Summary..........................................................................................................1
2. Tesla Company Overview.................................................................................................1
2.1 Segments & Operations..........................................................................................2
2.2 Sales & Marketing...................................................................................................2
2.3 10-Year Financial Health.........................................................................................2
2.4 Business Strategy....................................................................................................4
3. Macroeconomic and Industry Overview..........................................................................4
3.1 Macroeconomic Outlook: The United States..........................................................4
3.2 Macroeconomic Outlook: China.............................................................................5
3.3 Tesla Industry Overview..........................................................................................5
4. Acquisition Targets...........................................................................................................6
4.1 Interplex Holdings...................................................................................................7
4.2 Livent Corporation...................................................................................................8
4.3 Nuvoton Technology Corp.......................................................................................8
5. Target Analysis & Evaluation............................................................................................9
6. Financial Analysis and Financial Projections...................................................................10
6.1 Financial Analysis and Financial Projections – Tesla (Acquirer)...........................10
6.2 Financial Analysis and Financial Projections – Interplex (Target).........................11
6.3 Valuation Analysis of Interplex..............................................................................12
7. Acquisition Synergies......................................................................................................13
7.1 Revenue Synergies: Overview...............................................................................13
7.2 Cost Synergies: Overview......................................................................................14
7.3 Quantitative Analysis of Synergies........................................................................15
8. Acquisition & Financing Structure..................................................................................16
8.1 Possible Sources of Funding..................................................................................16
8.2 Precedent Tesla Transaction Structures...............................................................17
8.3 Planned Acquisition & Financing Structure...........................................................17
9. Risks & Mitigation...........................................................................................................18
10. Conclusion.......................................................................................................................19
11. Appendices.....................................................................................................................21
11.1 Appendix A: Porters’ 5 Forces Analysis.......................................................21
“First, a feeble spark – next, a flickering flame – then, a mighty blaze, ever increasing in
speed and power.” Such were the words uttered by the eponymous Serbian inventor Nikola
Tesla, from whom the company Tesla Inc. (NASDAQ:TSLA) was named after. Tesla has
indeed lived up to the decorated luminary’s name, growing from a feeble spark to a
flickering flame, and to what it is now – a mighty blaze.
Tesla has been at the forefront of technology in multiple domains and is best known for its
cutting-edge Electric Vehicle (EV) technology. Being the indisputable global market leader in
EVs, however, has not been without problems – despite a strong degree of vertical
integration (c.80%), the company has found it difficult to keep up with ballooning demand
for its EVs. The Covid-19 pandemic only served to further highlight this issue, with supply
shocks demonstrating the vulnerability of its supply chain.
With a blended valuation of c.USD1.4bn, Interplex hits the sweet spot in terms of ideal
target valuation. Through acquiring the firm using a mix of cash, debt, and equity, Tesla will
be able to realize an exponential amount of synergies. The acquisition will further
strengthen Tesla’s position as a market dominator in the EV segment and unlock its
potential in further exploring other adjacent categories.
Tesla – a mighty blaze, ever increasing in speed and power. Through the acquisition of
Interplex, Tesla will be adding fuel to its intensifying fire, allowing it to further establish itself
as the paragon of EVs with a strong grasp of the EV supply chain.
The company has a growing network of Tesla Superchargers, which are industrial grade,
high- speed vehicle chargers, typically placed along well-travelled routes and in and around
dense city centers to allow Tesla-owners quick and reliable charging. Tesla offers certain
advanced driver assist systems under its Autopilot and Full Self-Driving options, and its US
customers generate nearly half of their sales.
Tesla operates in 2 reportable segments: (i) the Automotive segment, which comprises
Automotive Sales, Automotive Leasing, and other ancillary automotive-related services; and
(ii) Energy Generation and Storage.
The automotive segment generates over Total Revenue split by Segments (FY20)
94% of FY20 sales, which includes sales
(83%) and leasing (4%) of electric vehicles Automotive
6%
(EVs) as well as sales of automotive 7% Sales
4% Automotive
regulatory credits. Additionally, the segment
Leasing
is also comprised of services and others. It 35.5bn Services
accounts for 7% of sales and includes non-
Energy and
warranty after-sales vehicle services, sales 83%
Storage
of used vehicles, retail merchandise, sales
by the acquired subsidiaries to third party
customers and vehicle insurance revenue.
The company’s energy generation and storage segment (just over 6% of FY20 revenue)
makes and sells stationary energy storage products and solar energy systems to residential
and small commercial customers, as well as large commercial and utility grade customers.
Megapack and Powerpack also offer features like grouping multiple units to form larger
installations capable of reaching gigawatt hours or greater. Tesla’s solar energy systems
include solar panels and inverters, The company’s Solar Roof gathers solar energy from
glass tiles that aim to be more architecturally pleasing than traditional roof-mounted solar
panels.
Tesla markets and sells cars directly to consumers through website and an international
network of company-owned stores and galleries. Its solar energy and storage products are
typically sold directly to residential customers through the company’s stores and
galleries, and through channel partners as well as its website. An international sales
organization and network of channel partners market and sell Powerwall, Powerpack and
Megapack systems to commercial and utility customers.
Tesla’s financial history has been nothing short of remarkable – revenues and net profits
have grown by more than 100x in a decade, and the company has managed to break even in
FY20, subverting Wall Street expectations about its possible profitability.
Its history can be roughly grouped into three main phases: (i) ‘initialization’, where Tesla
saw rapid growth due to actualization of key ideas, and continuous investment was poured
into R&D and other forms of capex; (ii) ‘revving the engines’, where Tesla refined its key
Private and Page 2 Acquisition of Interplex by
success
In 2020, the company generated total revenue of US$31.5bn, an increase of nearly US$7bn
compared to the previous year. Automotive sales increased around $6 bn or 31% in 2020
compared to 2019, driven by the increase of nearly 130,000 Model 3 and Model Y cash
deliveries despite production limitations caused by temporary suspensions of operations at
the Fremont Factory and Gigafactory Nevada in the first half of the year.
(20,000) (2,000.0)
(1,962)
Net Profit
Margins -125% -96% -4% -9% -22% -10% -17% -5% -4% -2%
The company generated a net income of $721m in 2020, up from its net loss of $870m in
2019 due to its higher revenue. This was the first time in over a decade that Tesla was
profitable, marking a paradigm shift in how analysts view the company – no longer a
“bottomless abyss”, but rather a well-oiled profit-making machine.
Cash at the end of 2020 was $19.4 bn, an increase of about $13.1 bn from the previous year.
Cash from operations contributed $5.9 bn, cash from investing activities amounted to $3.1
bn (driven by strong expansionary capex to fulfil EV demand), financing activities generated
$10.0 bn (given Tesla’s desire for increased cash to fund further growth through buy-and-
build strategies in the upstream EV market and to fund further capex) – thus demonstrating
robust cash conversion.
3. following
The Macroeconomic and Industry
sections analyse Overview
how Tesla is affected by macroeconomic factors, as well as
Tesla’s position vis-à-vis the larger EV industry.
3.1 Macroeconomic
Federal Outlook: The
Open Market Committee United
(FOMC) Statesa GDP growth of 6.5%, core PCE inflation
predicts
of 2.2% and unemployment rate of 4.5% in 2021 on a 4Q/4Q basis. In a bull case, the
reopening of US economy accelerates with a more robust consumer response. Business
activities return to higher levels and labour costs and pushed higher, with unemployment
rate back to pre-Covid levels sooner. In a bear case, vaccine progress is hindered by a high
share of the population opting out. Additionally, the variants and hospitalizations outpace
the vaccines, resulting in renewed lockdown measures. Fiscal support remains and
recessionary dynamics take hold with greater permanent job loss and a deeper default cycle
of delinquencies and foreclosures.
Labour market progress in 2021 has been slower than expected, but it will likely accelerate
later this year as labour supply returns to balance out demand. In anticipation of the
expiration of Covid Unemployment Insurance Program, there will be a greater lift to
employment and labour force participation.
The expected reopening surge in inflation is under way, evidenced in a wide range of survey
data on business costs, higher indications on labour costs, as well as sharp rises in consumer
and product price indices. The factors driving the near-term run up in prices stem largely
from supply-chain bottlenecks and mobility-sensitive components of inflation. Supply chain
pressure should rise as the reopening continues to advance both domestically and globally
and there are decent evidence that chip shortage has impacted supply and pricing on a
range of goods. These supply-chain pressures compound with elevated demand for goods
that has pushed inventories markedly low and has already led to evident demand-pull
inflation in many segments of core goods inflation.
Consensus predicts a GDP growth of 9.0% and PPI outpacing CPI, leading to a margin
compression for China.
Real private consumption is likely to grow 13.5% after contracting at -3% in 2020, returning
to a pre-Covid path and mix by 4Q21. This is driven by a continuous labour market recovery
and a stable domestic Covid situation. Combined with a rebound in government
consumption, overall consumption should lift headline GDP growth by 6.9ppt in 2021.
The rise in PPI is driven by a faster stimulus-led global demand recovery and ongoing
decarbonization-related production cuts. This could mean a higher cost environment for
companies in the near term and enter a gradual downward trend, assuming moderation in
domestic construction demand amid slower credit growth, continued global supply recovery
and a higher comparison base kicking in by 2H. Meanwhile, core CPI would rise gradually,
driven by the broader service consumption recovery. Additional tightening in the form of
policy rate hikes is not expected to contain rising PPI inflation, since policymakers are likely
to see the recent rise in PPI as largely imported inflation pressures. A margin squeeze is
expected in the near term during the height of an upstream price surge, but as commodity
prices peak in 2Q21, the strong final demand at the macro level due to global recovery
should help support broader downstream pricing. Sectors with structural tailwinds or
prolonged capacity constraints such as EV supply chains and semiconductors generally enjoy
greater pricing power.
As c.87% of Tesla’s FY20 revenues are derived from its EV business, this paper will
primarily analysing the EV industry. A more detailed analysis can be found in Appendix A.
Bargaining Power of Suppliers (high): Tesla derives its raw materials from a large,
diversified array of suppliers, which include (i) car part suppliers such as Fisher Dynamics,
Sika, Brembo;
(ii) EV battery suppliers such as Panasonic, CATL; and (iii) semiconductor and electronic
equipment suppliers, such as Samsung, Delta Electronics and Nvidia. While Tesla has
minimal supplier concentration risk given its diversified supplier base, the company has
previously faced problems in being unable to purchase enough supplies to keep up with its
strong external demand. This results in suppliers having significant bargaining power due
to Tesla’s dependency on them to fulfil its strong demand.
Bargaining power of buyers (moderate): EVs are big ticket items – this means that
customers typically do not purchase multiple EVs and are not incentivized to switch,
especially given the Tesla ecosystem customers are drawn into. Furthermore, there are few
available substitutes given the relative nascence of the EV market.
Threat of substitutes (moderate): The few substitute EVs in the market lack Tesla’s
branding, which is a strong differentiator – and other forms of transportation are either
unfeasible given geographic concerns or not close substitutes given the premium nature of
EVs.
Threat of new entrants (low): High barriers to entry in terms of technological capability and
manufacturing capacity deter possible EV upstarts. While VC/PE investment into
autonomous driving has been growing, Tesla’s time advantage renders it an
unshakeable market leader.
4. Acquisition Targets
To select the 3 targets, a Tesla target universe was first established. This was done through
scouring various online databases about companies, as well as through primary research on
possible acquisition targets, both publicly listed and private-owned. This target universe was
identified based on whether they had operations in the EV / adjacent spaces
1Business Relevance
2Technical Expertise
3Transaction Likelihood
Tesla Target
In order to ensure the greatest degree of alignment with Tesla and its operations, a set of
three preliminary criteria were first established: business relevance, technical expertise, and
transaction likelihood.
The first screening process sieved out companies with no clear and strong business
relevance to Tesla based on primary research and analysis of business operations. This
narrowed down the target universe of approximately c.380 companies to <100, with the
Private and Page 7 Acquisition of Interplex by
diagram below showing examples of these companies. Thereafter, the second screening
process sieved out
Three targets have thus been shortlisted out of the Tesla target universe: Interplex Holdings,
Livent Corporation, and Nuvoton Technology Corp. To ensure strong alignment with Tesla, a
second sanity check calculation was conducted to affirm suitability. This check was based on
two criteria: (i) industry, whereby the target must be situated along the upstream portion of
the EV supply chain; (ii) size / scale, whereby the target must have a strong record
(minimally c.$500m of revenue), such that the acquisition will have a significant impact on
Tesla’s EV operations. The three targets successfully meet the two sanity check criteria,
lending further credibility to themselves as prospective acquisition targets.
Being a component manufacturer, Interplex lies largely upstream in the supply chain. The
company has over c.25 locations across 4 continents, with its main manufacturing plants
located in California, Singapore, and Shanghai.
As a target, Interplex complements Tesla well – given its similar geographic footprint, strong
abilities in EVs (particularly in both the vehicle components and battery space), and in-depth
technical knowhow, which will likely be able to further refine Tesla’s intermediate EV
manufacturing process and supply chain. This is particularly important, as it could reduce
raw materials required and speed up the manufacturing process when creating intermediate
products, thus reducing material/supplier requirements and time-to-market.
As one of the five largest producers of lithium compounds, Livent has operations throughout
the US, Asia, Europe and China, with its main lithium brine and production facilities located
in Argentina and most of its manufacturing plants based in US and China.
As a target, Livent complements Tesla well – given that it is one of Telsa’s current
supplier of Lithium compounds (batteries), and its expertise and resources in producing
Lithium compounds, which will help to solve Tesla’s supply chain bottlenecks and help
secure a stable supply of EV batteries and lower their cost of production. Furthermore, as a
pure lithium company that supplies batteries to EV companies worldwide, Livent is well
positioned as the world’s EV penetration rate begins to rise, with EV sales expected to hit
approximately 25.8 million units in 2030.
Nuvoton Technology Corp focuses on the research and development, design, and sales of
integrated circuits. It provides semiconductors for consumer and computing applications
worldwide. The company's product lines consist of Consumer Electronics integrated Circuits
(IC) and Computer IC. It also offers microcontrollers, microprocessor, audio, computer and
cloud computing IC applications.
The company has established subsidiaries in USA, China, Israel, India, Singapore, Korea and
Japan to strengthen regional customer support and global management. Their main sources
of revenue are attained from Asia and USA.
As a target, Nuvoton complements Tesla well – given its widespread geographical presence
and its position in a complementary vertical as a semiconductor manufacturer. The
geographical presence reduces the likelihood of semiconductor shortage experienced due to
logistical issues. With regards to semiconductor foundry services, Nuvoton is known to
cultivate the power supply and enhance the competitiveness of the customer’s products to
satisfy diverse demands. This enhancement could very well value-add to Tesla’s automotive
functions by diversifying the scope of their offerings with consumer and computing
applications.
A set of 5 criteria has been identified to evaluate the 3 possible targets to determine
transaction suitability: (i) business relevance: whether the target’s business divisions have
high degrees of synergy with Tesla; (ii) valuation: whether the target will be expensive to
acquire, and whether the target falls closely within Tesla’s acquisition capacity given
historical acquisitions and debt headroom (more details in Appendices B and C); (iii)
geographic presence: whether the target has facilities in Tesla’s key locations,
particularly the US (California) and China; (iv) transaction likelihood: an evaluation of the
possibility of success of the transaction; and (v) technical expertise: whether the company
has transferable skills that can either assist Tesla with production or its supply chain issues.
The 3 targets have been evaluated based on these five factors, with four possible ratings per
factor: (i) strong (dark green); (ii) moderately strong (yellow); (iii) moderately weak (light
red); and (iv) weak (dark red).
Interplex was chosen as the final acquisition target for Tesla, it having the highest
synthesized scores based on the table above. While all 3 targets are upstream players in the
EV industry (thus allowing possible vertical integration), Interplex is closest in proximity to
Tesla in the
Private and Page Acquisition of Interplex by
supply chain and has more direct relevance and possible synergies to be reaped. This
decision is supported by other factors that further boost Interplex’s attractiveness as a
target – a reasonable and attractive valuation, a broad geographic presence covering
Tesla’s main regions, high likelihood of transaction execution, and transferable technical
expertise.
6. Financial
Financial Analysis
Statements wereand Financial
prepared forProjections
Tesla (acquirer) and Interplex (target) on a 10-year
basis. These numbers include 5 years of historical financials and 5 years of projected
financials.
6.1
IncomeFinancial
StatementAnalysis and Financial Projections – 2018
Tesla (Acquirer)
2019 2020 2021E
Revenue 21,461 24,578 31,536 42,355
COGS (17,419) (20,509) (24,906) (34,421)
Gross Profit 4,042 4,069 6,630 7,934
Gross Profit Margin (%) 18.8% 16.6% 21.0% 18.7%
SG&A expenses (2,835) (2,646) (3,145) (4,793)
R&D expenses (1,460) (1,343) (1,491) (2,399)
Other Opex (135) (149) - -
EBITDA (388) (69) 1,994 742
EBITDA Margin (%) (1.8%) (0.3%) 6.3% 1.8%
D&A
D&A (% of revenue)
EBIT (388) (69) 1,994 742
EBIT Margin (%) (1.8%) (0.3%) 6.3% 1.8%
Interest Income 24 44 30 34
Interest Expense (641) (640) (870) (735)
PBT (1,005) (665) 1,154 41
PBT Margin (%) (4.7%) (2.7%) 3.7% 0.1%
Income Tax Expense 29 (197) (433) 0
Other Adjustments (8) (31) - -
Net Income (984) (893) 721 41
Net Income Margin (%) (4.6%) (3.6%) 2.3% 0.1%
Historical revenues were largely driven by the automotive segment (c.83% if FY20
revenues), the energy segment (c.6.3%), the services segment (c.7.3%) and the lease
segment (c.3.3%). Revenue growth increased with a CAGR of 35.1% year on year, with
slower growth experienced in 2019 and 2020 due to supply chain disruption from Covid-19.
The overall strong growth was driven by volume. From a macro perspective, the automotive
industry is shifting towards electric vehicles and an increasing pace. This, coupled with the
superior battery supply chain, superfast charging network and software updates, continue
to drive deliveries of Tesla’s electric car.
EBITDA margins for Tesla is expected to remain stable in the next five years. Tesla’s cost of
goods sold largely fluctuates in proportion to the revenue historically at a gross profit
margin of ~19%. Additionally, the segment with the highest profit margin, automotive
leasing, is
6.2 that
Given Financial Analysis
Interplex is notand Financial
a publicly Projections
listed company,– Interplex (Target) were prepared on
financial statements
a pro forma basis through the triangulation of various sources to arrive at a plausible
outcome. Key sources used include: (i) Shareholder Circular in relation to Baring’s
voluntary conditional general offer (dated Mar-2016); (ii) Moody’s rating announcement
(dated Oct- 2018); (iii) EMIS information (as of Dec-2019); (iv) information from various
databases, including Euromonitor, CEIC, S&P Capital IQ, and MergerMarket (retrieved Jun-
2021).
Historical revenues were largely driven by the automotive segment (c.78% of FY16
revenues), the energy segment (c.11%), and the consumer electronics segment (c.11%), in
line with historical public information undertakings. Revenue growth remained relatively flat
(c.5-7%) until FY20 whereby product mix shifted towards electric vehicles, and this growth is
expected to continue from FY21 at high teens. This strong growth is largely driven by
volume, with the rapid increase in EV demand necessitating the purchase of Interplex’s
produced components.
While raw material exposure does result in cyclicality and revenue fluctuations, this is
mitigated by cost pass-through to customers given the complexity of Interplex’s produced
components. This is modelled by tracking LME indices and projecting cyclicality based on
historical trends. Industry prices are conservatively modelled to remain constant.
EBITDA margins are expected to grow slightly from 12.5% in FY20 to 13.4% in FY21 (+89bps),
driven by operating leverage and a shift away from the low margin consumer electronics
Private and Page Acquisition of Interplex by
business. Expansionary capex is projected to grow given the likely need to build more plants
to support the strong demand for components (despite sufficient current capacity as
mentioned publicly by management), resulting in higher maintenance capex and D&A from
FY21-25. As a result, net income margins increase at a slower rate than EBITDA, from 5.8% in
FY20 to 6.6% in FY25 (+83bps).
To best identify the Enterprise Value of Interplex, a blended methodology was used, derived
from a discounted cash flow and relative valuation analysis (looking at both trading
multiples and transaction multiples). Using these assumptions in the context of the Tesla
acquisition, Interplex can be valued at c.US$1,444m (implied EV/EBITDA of 18x).
Valuation Football Field for Interplex (c.USD$1,444 valuation, 18x implied EV/EBITDA)
Method Valuation Range Median High Low
Blended Valuation 1,444 2,010 1,136
In conducting the relative valuation exercise, key competitors were identified from the
overall Interplex peer universe and divided into two buckets of peers: (i) Tier 1 Peers, which
are similar to Interplex in scale, geography, and business operation; and (ii) Tier 2 Peers,
which while similar to Interplex in business operation, differ in terms of scale and possibly
geography. Tier 1 Peers include Enerpac, Columbus McKinnon, and Enpro; Tier 2 Peers
include TE Connectivity and Singapore-based InnoTek. A higher weightage of 15% was
placed on the forward revenue and EBITDA multiples, while a lower weightage of 10% was
placed on the trailing revenue and EBITDA multiples, given the recency and stronger
comparability of forward-looking multiples. This is further supported by how Covid-19 has
affected LTM revenue and EBITDA, resulting in artificially depressed multiples. More
information can be found in Appendix E.
Higher weightage of 15% was placed on precedent transactions (exit Revenue and EBITDA
multiples), given the similarity of these transactions and the strategic aspect in most of
these transactions resulting in embedded acquisition premia. Key relevant transactions that
were
Cost of Debt 1.84% Triangulated from current interest expense and synthetic cost of debt based on interest coverage ratio and SORA
Market Risk Premium 3.24% Excess return of the Straits Times Index over the Risk-free Rate
Cost of Equity 6.06% Calculated based on Risk-Free Rate, Beta, and Market Risk Premium
LT Growth Rate 3.50% Based on Singapore inflation rate adjusted for a post-Covid-19 scenario
While DCF as a valuation method is robust and accurately reflects intrinsic valuation based
on future cash flows, low cash conversion and pre-financing cash flow results in a significant
portion of the valuation being derived from the terminal value, which is an inherent
drawback from using such a valuation technique. As such, lower weightage of 20% was
placed on the DCF valuation. More details on the DCF valuation can be found in Appendices
F and G.
Overall, the c.$1.4bn valuation is reasonable given the strong synergies that can be reaped,
as well as the implied multiple being in line with peers.
7. will
Tesla Acquisition
be able toSynergies
reap strong revenue and cost synergies through the acquisition of
Interplex. More details on the synergies can be found below.
7.1 Revenue
Revenue Synergies:
Synergy 1, 2 – Overview
Cross-selling to new clients: As a leading multi-technological
solutions provider with a focus on the EV end market, the acquisition of Interplex will allow
both companies to cross-sell to new clients (Interplex’s tech clients, Tesla’s
automobiles, and clients) in various locations around the world where Interplex or Tesla has
a presence in. This will help bring in new sources of revenue for both Tesla and Interplex as
they increase their outreach and client pool.
Revenue Synergy 4 – Interplex increases premium with Tesla’s branding: Interplex will
be able to tap on Tesla’s brand image as the leader in the EV market and push out
their EV related end products at a greater price. Over the years, Tesla has developed a
reputation for producing superb products, building on the appeal for EVs model after model.
Not only has Tesla’s Model S Sedan won nearly every big auto award, but it also
provides its customers exceptional products and good service, creating one of the strongest
brands in the world. With this acquisition, Interplex will have a global stage to showcase its
technologies and acquire new manufacturing deals, driving its revenue in the middle to long
term.
Cost Synergy 5 – Savings from reduced lead time: Interplex technologies in electronic
modules and packaging solutions such as its highly efficient solder and flux bearing
technology (refer to Appendix H) will help to eliminate costly and defect prone soldering
methods. This will help to reduce the lead time in Tesla’s automobile manufacturing as the
parts can be quickly assembled and at a lower cost. Their unique design will also allow them
to change their plating efficiently without costly changeover times, allowing for greater
customisability and flexibility when manufacturing parts for different end products or
vehicles.
Cost Synergy 6A – Savings from sales and marketing costs: By leveraging on Telsa’s direct
sales channels and its international network of company-owned showrooms and galleries,
Interplex can reduce its middleman costs, and make direct sales to its clients/customers
instead of relying on third party agents to help them sell their products. This will help
Interplex to lower their distribution and selling costs.
Cost Synergy 6B – Savings from shared backend systems: Both companies can also share
their backend systems such as IT as well as reduce redundant management overhead such
as HR. This will allow for greater operational efficiencies and lower costs from lower wages
and salaries.
Cost Synergy 7 - Savings from subassembly outsourcing : Tesla could outsource its
subassembly design-to-production which will offer time-to-market advantages and cost
savings. Interplex operates from over 25 worldwide locations in 11 countries and most
importantly, it is present in the countries where Tesla main manufacturing facilities are in.
Interplex engineers bring with them broad manufacturing expertise with experience in the
EV industry’s quality and standards requirement. They also have a proven track record of
successes with subassembly design and manufacturing and can quickly deliver tailored
results that mesh with Tesla’s overall production environment. The close geographic
proximity with Tesla’s facilities and Interplex’s adaptable engagement models will
Private and Page Acquisition of Interplex by
Tesla to expand its capabilities, lower their costs of production and accelerate their time-
to-market.
7.3 Quantitative
Synergies Analysis
were analysed andof quantified,
Synergies and further evaluated to identify impact onto
EBITDA on a consolidated group level. More details about assumptions in each scenario can
be found in Appendix I.
Legend of Synergies
1 2
Tesla can cross sell it’s energy storage and solar installations to
Tesla can cross-sell to Interplex’s automotive clients Interplex Clients
Revenue
Synergies
3 4 Interplex can implement a price premium on their electric vehicle and
With Interplex’s sophisticated engineering capabilities, Tesla will be
able to increase it’s premium as a market leader non electric vehicle parts on the basis of Tesla’s strong branding
5 6
Interplex attains SG&A savings from sharing distribution costs and
Tesla and Interplex R&D attains savings from economies of scale backend systems with Tesla
Cost
Synergies
7 8
Tesla attains automotive COGS savings from subassembly outsourcing Interplex attains energy COGS savings from production efficiencies
8
6 7 7
Initial EBITDA 3 4 5
1 2
Potential Synergies
Indicative total value of synergies = c. 1,327m
To be verified with commercial & legal due diligence
8
6 7 7
Initial EBITDA 3 4 5
1 2
Potential Synergies
Indicative total value of synergies = c. 2,783m
To be verified with commercial & legal due diligence
Synergies as mentioned in the qualitative section are applied on a revenue, gross profit, and
operating income level, and base case projections indicate potential synergies of c.$2bn to
be reaped over a period of 5 years (to be verified with commercial and legal due diligence).
These synergies were built on an incremental basis, with the effects of the Interplex
acquisition varying the bottom-up revenue and cost projections for both Tesla and Interplex.
Given the significant scale difference between the acquirer and the target, a vast majority of
synergies reaped are derived from Tesla’s operational improvements, as is also reflected in
the EBITDA bridges above, wherein the synergies attributable to Tesla are of significantly
higher scale than those of Interplex.
There are several methods Tesla can adopt to finance the acquisition of Interplex, including
cash, debt, or equity. These methods will be further discussed below.
Cash: A possible source of funds is cash, whereby Tesla draws from its existing cash balance
to fund the acquisition. Tesla’s cash balance has risen sharply over the years to
US$19.3bn as of FY2020, which is sufficient to fully acquire Interplex. However, the company
is a capital- intensive manufacturing business with significant working capital requirements,
which limits the availability of cash a source of funds.
Debt: There are various types of debt that can be used to fund the acquisition, including
bonds, term loans or mezzanine financing. While debt financing is a preferred acquisition
source due to lower cost of capital, tax shield benefits, increased ROE through leverage and
Equity: Despite the higher cost of capital, an all-equity M&A financing could potentially be
advantageous as it does not draw down on existing cash, prevents increased leverage,
ensures stronger cash flows due a to lack of dividend payments, and incentivizes existing
management to continue lending their expertise to the ultimate merged Co. However,
issuing stock has a dilutive effect and could potentially hurt Tesla’s EPS. Return on equity
could also be affected given the deleveraging effect. Furthermore, the volatility of Tesla’s
share price can cause uncertainty about the exact acquisition valuation, hindering the
planned transaction.
8.2 Precedent
Looking Tesla
at Tesla’s pastTransaction Structures
transactions, a notable one would be the acquisition of SolarCity,
in which an all-stock transaction was carried out. Tesla fully acquired SolarCity’s
outstanding common stock in exchange for Tesla’s shares. The same financing method
was carried out for Maxwell Technologies as well in 2019. While equity financing can bring
about some advantages such as the flexibility of the investors or the availability of excess
cash and incentivise the new partners to maximise shareholders’ value, it may lead to a
loss of control of the company or lead to a potential for conflict among the partners.
8.3 above
The Planned Acquisition
factors & Financing
were taken Structure when deciding the ultimate transaction
into consideration
structure for the Interplex acquisition. Given Interplex’s Enterprise Value of US$1,444m,
the replacement of target debt for US$235m and total financing fees of US$48m for the
transaction, total uses of funds add up to US$1,728m.
Financing fees are incurred as part of the acquisition process – these are used for reasons
such as but not limited to underwriting, bookrunning, syndications, conducting due diligence
processes, and other miscellaneous expenses. Debt replacement is use for the refinancing of
Interplex.
The remaining 40% cash consideration will be split between two sources: cash, and debt.
Based on benchmarking of Moody’s and S&P ratings of similar companies, it is likely
that the benchmark for Tesla to be rated one notch lower would be a net leverage of 1.50x.
Assuming an internal net leverage covenant of 1.425x (5% headroom to 1.50x threshold),
this implies that Tesla can raise an additional c.US$751m of debt.
As such, the proposed transaction structure includes a TLA of US$750m and cash drawdown
of US$111m. A TLA was used over a bullet term loan due to the deleveraging effect of
amortization and preferability of margins.
Risks were identified and analysed according to impact and likelihood, as charted below:
Key Business Risks analysed by impact and likelihood
(A) Competition Risk: Rising competition could reduce the demand for Tesla’s cars.
The rise of EV companies around the world has been slowly diminishing Tesla’s market
share in the EV industry, as brands like NIO has come up with cheaper, affordable EVs and
are favourably backed their government. While this acquisition could help Tesla fulfil its
current backlog of orders due to bottlenecks in its supply chain, the continued rise and
growth of EV companies around the world will slowly chip away at Tesla’s market share.
We take comfort that Tesla currently has a market share of about 16% in the EV market and
sets itself apart from its competitors with its premium features such as AI driving,
supercharger network and other advanced software.
We take comfort that the potential synergies that will arise from this acquisition will
rightfully justify the current valuations of Interplex, given the capabilities of Interplex.
(C) Risks from external factors: The prolonged effects of the pandemic as new variants of
the virus are discovered could potentially lead to further shutdowns as various parts of the
world are still hard hit by Covid-19. This could lead to further supply chain bottlenecks as
factory workers are unable to resume working due to new restrictions. The recent Suez
Canal blockage has also shown the vulnerability of the global supply chain as many
container ships were trapped, of which 25 ships were going to or coming from ports in the
United States, with a combined capacity of 217,400 TEUs (Twenty-foot Equivalent Units).
This could result in further shutdowns in manufacturing as further supply shocks from
external factors could impact both Tesla and Interplex.
We take comfort that such risks from external factors will affect everyone in the industry,
furthermore, these factors are mostly short-termed, and normalization of business will
eventually return in the middle to long term.
(D) Underperformance risk: Due to the missing of key targets, unrealized synergies, and
poor execution after the merger, Tesla could underperform compared to base case
projections. This could be due to poor management post-merger as there are a multitude of
issues that have to be dealt with, creating significant risks, the threat of employee
disenchantment and ultimately, loss of value.
We take comfort that this is not the first acquisition that Tesla is undertaking, and its past
acquisitions have shown a great integration of both companies and is supportive to Tesla for
a goal of achieving vertical integration functionally and expanding markets by offering a
wider application of Tesla’s products and services.
10. Conclusion
Of the 5 evaluation criteria identified, Interplex is deemed the most suitable acquisition
target for Tesla, with a stronger business relevance and offering more synergies with its
expertise in manufacturing and close proximity with Tesla. Through this acquisition, Tesla
will see an improvement to its supply chain supplemented by the increased operating
capabilities particularly in manufacturing of batteries and vehicle parts.
By using a mixture of financing methods such as cash, debt, and equity, this will allow Tesla
to acquire Interplex with the lowest cost of capital, while taking into consideration of its
working capital requirements, leverage ratio and return on equity, maximising its available
sources of funding.
While this acquisition brings about potential risks, the team believes that the benefits
outweigh the cost given the numerous problems Tesla is currently facing. Tesla needs to
ramp up its production and continue working on new technologies to face off the likes of
NIO and XPENG, while ensuring they remain attractive compared to traditional carmakers
such as Ford and Honda. With the increasing adoption of EVs around the world, the EV
market expected to grow at a forecasted CAGR of 21.7% from 2020-2027. There are
significant growth opportunities that Tesla must capture and maintain its dominance in the
EV market, and it cannot afford to slow down its momentum now.
“First, a feeble spark – next, a flickering flame – then, a mighty blaze, ever increasing in
speed and power.” With Interplex acting as fuel to Tesla, the ever-hungry flame,
momentum will be secured, and Tesla will be able to charge forward and maintain its
dominance. Interplex’s technology will add speed, and its manufacturing capacity will add
power – a truly perfect union of two entities.
– End of Report –
i
Bargaining Power of Suppliers
oderate
Industry Rivalry
o oderate
Threat of New Entrants Threat of Subs tutes
oderate
Bargaining Power of Buyers
German-based battery
manufacturer
ATW Automation
Undisclosed Subsidiary of Canadian ATS
Q3 2020 Tooling Systems
Est. >$250m Owns c.20 battery production
lines used for various
automakers including Tesla
Canadian manufacturer of
automated liquid dispensing and
Hibar Systems
Undisclosed filling systems and Lithium-ion
Q2 2019 battery assembler
Est. >$500m Manufacturing facilities in North
America, Europe, South Korea,
Japan, Malaysia, and China
Net Leverage was analysed on a Jun-21 basis to identify debt headroom and the availability
of debt.
A few key considerations were looked at when trying to determine the maximum size of the
debt quantum:
To be conservative and to preserve maximum accuracy, cash position of Interplex was not
considered for the net leverage calculation. Net leverage (given EBITDA of $4.5bn) thus
amounts to 1.26x.
Maximum permitted indebtedness was identified as >1.0x of EBITDA, and thus does not
have significant relevance to debt headroom calculation inasmuch as debt quantum even in
a 100% debt scenario is less than a turn of Tesla’s EBITDA.
Additionally, Leverage Covenants are private and likely only available to Tesla and its
financiers – such documentation is not readily available and can only be triangulated based
on debt raised and scale of the company.
Looking at peers, when leverage hits a certain level, the rating is likely to drop, thus
resulting in an increase in spreads.
This is evident in the chart below, which demonstrates the impact of the change in ratings as
given by ratings agencies with change in spreads. This demonstrates the significant
importance of maintaining ratings to ensure cost of debt remains relatively constant.
The identified notching benchmark of 1.5x thus implies a 16% headroom of current net
leverage. While it is possible for Tesla to raise 0.24x more of debt against current EBITDA
levels, prudence dictates the need to comply with internal covenants. Assuming a 5%
headroom between internal covenants and the notching benchmark, internal covenant
would thus be at 1.425x.
This implies that 0.165x of debt can still be raised against Tesla’s current EBITDA levels,
which amounts to c.$750.75m of debt.
Based on these criteria, the precedent transactions were identified and grouped into 2
categories based on relevance.
Innovalues, Sungshin, Beijing Pride Power System, and Gimatic (bolded in the table above)
are the closest transactions to the Interplex transaction, given the similarity in terms of
target business operations and geography, size, and scope.
These transactions were analysed and used for the relative valuation calculations to derive
the final valuation for Interplex.
Publicly traded companies of similar scale and scope to Tesla were identified. In conducting
the relative valuation exercise, key competitors were identified from the overall Interplex
peer universe and divided into two buckets of peers: (i) Tier 1 Peers, which are similar to
Interplex in scale, geography, and business operation; and (ii) Tier 2 Peers, which while
similar to Interplex in business operation, differ in terms of scale and possibly geography.
Tier 1 Peers include Enerpac, Columbus McKinnon, and Enpro; Tier 2 Peers include TE
Connectivity and Singapore-based InnoTek.
Interplex has been valued based on these peers as can be seen below:
The boxed-up numbers represent, respectively, FY20 Revenue, FY20 EBITDA, FY21 Revenue,
and FY21 EBITDA. These were used for, respectively, trailing EV/Revenue, trailing
EV/EBITDA, forward EV/Revenue, and forward EV/EBITDA.
‘Median’ refers to the median multiple across the peer universe; ‘average’ refers to the
average multiple across the peer universe; ‘high’ refers to the 75th percentile multiple across
the peer universe; and ‘low’ refers to the 25th percentile number across the peer universe.
For the discounted cash flow calculation, a targeted weighted average cost of capital based
on targeted capital structure was identified. This was used to discount future cash flows to
derive the net present value of Interplex.
To derive the weighted average cost of capital, the following formula was used:
𝐷 𝐸
𝑊𝐴𝐶𝐶 = ∙ (1 − 𝑇) ∙ 𝐶𝐷 + ∙ 𝐶𝐸
𝐷+𝐸 𝐷+𝐸
This formula adds the cost of debt, multiplied by the weight of debt in the target capital
structure, further adjusted for taxation, with the cost of equity, multiplied by the weight of
equity in the target capital structure.
𝐶𝐸 = 𝑅𝐹 + 𝛽 ∙ (𝑅𝑀 − 𝑅𝐹)
Risk free rate was identified as the Singapore 10 Year bond yield of 147bps
Beta was identified through taking the median of Interplex’s comparables – which
resulted in a pre-adjustment beta of 1.35; however, given the size and cyclicality of
Interplex’s business and to ensure conservatism, a 5% adjustment was applied, bringing
post-adjustment beta to 1.42
Market risk was identified by looking at the Straits Times Index’s 20 year return (from
Jun- 01 to Jun-21) and annualizing the average of its monthly returns
Current information on Tesla: Current information about cost of debt was computed
using available information about debt tranches and margins, sense-checked through
dividing annual interest expense by total bank borrowings by Tesla. Cost of debt
identified in this method ranges from 200-275bps – to be conservative, 250bps was used
as a basis for the first point of cost of debt triangulation given higher margins on older
debt tranches given then-unprofitability
Synthetic ratings based on interest coverage ratios: Synthetic ratings were identified for
Tesla based on interest coverage ratios, following the table in the next page (as
synthesized by New York University – Stern). Based on interest coverage ratios, Tesla’s
synthetic rating is AAA, resulting in a base rate spread of 0.75%. Using SORA as a
reference rate (given the graduation of LIBOR and other rates based on the LIBOR) of
0.43%, cost of debt as identified through this methodology is 43bps + 75bps = 118bps
6.50 – 8.50 AA 1
5.50 – 6.50 A+
4.25 – 5.50 A
3.00 – 4.25
2.50 – 3.00
2.00 – 2.50
1.75 – 2.00
1.50 – 1.7
1.25 –
0.80
Target capital structure shows a 32.2% weightage of debt, and a 67.8% weightage of equity.
With these assumptions, final WACC was identified as 470bps.
To arrive at unlevered free cash flow (attributable to all shareholders), the following
adjustments were made to EBIT:
Tax excluding interest payments given that enterprise value (attributable to all
shareholders) was being calculated
Net capex was subtracted (it being a cash flow item)
Increase in WC was subtracted (it being a cash flow item)
D&A was added back (it being a non-cash item)
Thereafter, the unlevered free cash flows were discounted at the target WACC of 4.7%.
Terminal value was calculated through the Gordon Growth method:
𝐷1
𝑃=
𝑟−𝑔
In this case, D1 was identified as D2025 multiplied by the LT growth rate. D2025 was $15.2m,
and LT growth rate was 3.5% (adjusted for Singapore Post-Covid inflation 19 rates), resulting
in D1 being $15.7m.
Factors r (cost of capital) and g (long-term growth rate) were the target WACC of 4.7% and
the abovementioned 3.5% respectively.
Overall, the enterprise value based on the discounted cash flow analysis is c.$1.4bn, which is
close and comparable to the enterprise values derived from other valuation methodologies
used.
To further demonstrated the robustness of this analysis, a sensitivity table was created,
sensitizing LT growth rates and WACC:
The sensitized valuation figures differ from the $1.374bn number by a maximum of c.$150m
in the worst-case scenario. In the best-case scenario, valuation can increase by almost c.
$200m, showing the strength of the valuation analysis.
Income Statement
Revenue 453.3 482.7 514.8 554.0 626.6 729.0 851.8 984.2 1,120.4 1,301.1
COGS (297.8) (317.1) (338.2) (364.0) (411.7) (479.0) (559.6) (646.6) (736.1) (854.8)
Gross Profit 155.5 165.6 176.6 190.0 214.9 250.1 292.2 337.6 384.3 446.3
Gross Profit Margin (%) 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3% 34.3%
SG&A expenses (73.1) (77.8) (83.0) (89.3) (101.0) (116.2) (134.2) (153.3) (172.5) (198.0)
R&D expenses (15.0) (15.9) (17.0) (18.3) (20.7) (24.1) (28.1) (32.5) (37.0) (42.9)
Other Opex (10.8) (11.5) (12.3) (13.2) (14.9) (17.4) (20.3) (23.4) (26.7) (31.0)
EBITDA 56.7 60.3 64.4 69.3 78.3 92.4 109.5 128.3 148.1 174.3
EBITDA Margin (%) 12.5% 12.5% 12.5% 12.5% 12.5% 12.7% 12.9% 13.0% 13.2% 13.4%
D&A (21.3) (22.7) (24.2) (26.0) (29.4) (31.9) (38.5) (46.8) (56.7) (68.3)
D&A (% of revenue) 4.7% 4.7% 4.7% 4.7% 4.7% 4.4% 4.5% 4.8% 5.1% 5.3%
EBIT 35.4 37.7 40.2 43.2 48.9 60.6 71.0 81.6 91.4 106.0
EBIT Margin (%) 7.8% 7.8% 7.8% 7.8% 7.8% 8.3% 8.3% 8.3% 8.2% 8.1%
Interest Income 0.4 0.4 0.5 0.6 0.6 0.7 0.7 0.8 0.9 0.9
Interest Expense (5.9) (5.9) (5.9) (5.9) (5.9) (5.9) (5.9) (5.9) (5.8) (5.8)
PBT 29.8 32.2 34.8 37.9 43.6 55.4 65.8 76.5 86.4 101.1
PBT Margin (%) 6.6% 6.7% 6.8% 6.8% 7.0% 7.6% 7.7% 7.8% 7.7% 7.8%
Income Tax Expense (5.1) (5.5) (5.9) (6.4) (7.4) (9.4) (11.2) (13.0) (14.7) (17.2)
Other Adjustments -- -- -- -- -- -- -- -- -- --
Net Income 24.8 26.7 28.9 31.5 36.2 46.0 54.7 63.5 71.7 83.9
Net Income Margin (%) 5.5% 5.5% 5.6% 5.7% 5.8% 6.3% 6.4% 6.5% 6.4% 6.5%
Net Income (% growth) -- 7.9% 8.0% 9.0% 15.1% 26.9% 18.9% 16.2% 13.0% 17.0%
Non-Current Assets:
Plants, Property & Equipment 117.4 125.1 133.3 142.2 152.2 170.9 193.7 220.3 249.9 285.2
Operating Lease Right-of-use Assets -- -- -- -- -- -- -- -- -- --
Operating Leases-net -- -- -- -- -- -- -- -- -- --
Solar Energy Systems, Leased and to be Leas -- -- -- -- -- -- -- -- -- --
Mypower Customer Notes Receivable, Net o -- -- -- -- -- -- -- -- -- --
Goodwill -- -- -- -- -- -- -- -- -- --
Intangible Assets, Net -- -- -- -- -- -- -- -- -- --
Restricted Cash, Net of Current Portion -- -- -- -- -- -- -- -- -- --
Other Assets -- -- -- -- -- -- -- -- -- --
Total Non-Current Assets 117.4 125.1 133.3 142.2 152.2 170.9 193.7 220.3 249.9 285.2
Total Assets 337.6 377.5 401.8 449.1 494.3 552.0 626.0 703.7 794.4 900.4
Current Liabilities:
Accounts Payable 48.9 55.3 55.9 63.8 71.5 80.7 97.2 108.3 125.6 146.1
Accrued Liabilities -- -- -- -- -- -- -- -- -- --
ST Portion of LT Debt 0.1 0.1 0.1 0.1 0.1 0.1 0.1 1.2 2.4 2.4
Convertible Senior Notes -- -- -- -- -- -- -- -- -- --
Deferred Revenue -- -- -- -- -- -- -- -- -- --
Customer Deposits -- -- -- -- -- -- -- -- -- --
Resale Value Guarantee -- -- -- -- -- -- -- -- -- --
Other Current Liabilities 9.3 16.2 11.1 19.2 20.5 23.1 26.2 29.3 32.2 36.1
Total Current Liabilities 58.3 71.6 67.1 83.0 92.1 103.9 123.5 138.8 160.2 184.5
Cash at beginning of year 62.7 74.5 87.7 102.0 117.0 129.1 139.9 142.9 159.8 170.2
Foreign Exchange Rate Adjustment -- -- -- -- -- -- -- -- -- --
Change in Cash 11.7 13.2 14.3 14.9 12.1 10.8 3.0 16.9 10.4 8.8
Cash at end of year 74.5 87.7 102.0 117.0 129.1 139.9 142.9 159.8 170.2 179.0
FORECAST
Tesla (NASDAQ: TSLA) Historicals
2021 2022 2023 2024
2016 2017 2018 2019 2020
Income Statement
Revenue 7,000 11,759 21,461 24,578 31,536 42,355 59,060
COGS (5,401) (9,536) (17,419) (20,509) (24,906) (34,421)
Gross Profit 1,599 2,223 4,042 4,069 6,630 7,9
Gross Profit Margin (%) 22.8% 18.9% 18.8% 16.6% 21.0%
SG&A expenses (1,432) (2,477) (2,835) (2,646) (3
R&D expenses (834) (1,378) (1,460) (1,343)
Other Opex - - (135)
EBITDA (667) (1,632) (388)
EBITDA Margin (%) (9.5%) (13.9%)
D&A
D&A (% of revenue)
EBIT (66
EBIT Margin (%)
Interest Income
Interest Expense
PBT
PBT Margin (%)
Income Tax Expense
Other Adjustments
Net Income
Net Incom
N
Balance Sheet
Current Assets:
Cash 3,393 3,368 3,686 6,268 19,384 18,270 20,336 24,517 29,788 38,119
Accounts Receivable 499 515 949 1,324 1,886 2,232 3,278 4,592 6,224 8,759
Inventory 2,067 2,264 3,113 3,552 4,101 5,932 7,980 10,871 15,268 21,063
Other Current Assets 300 424 559 959 1,346 1,346 1,346 1,346 1,346 1,346
Total Current Assets 6,260 6,571 8,307 12,103 26,717 27,779 32,940 41,326 52,626 69,287
Total Assets 22,664 28,655 29,740 34,309 52,148 52,959 57,878 66,298 77,484 94,070
Current Liabilities:
Accounts Payable 1,860 2,390 3,405 3,771 6,051 7,148 9,926 14,198 19,104 26,686
Accrued Liabilities 1,210 1,731 2,094 3,222 3,855 3,855 3,855 3,855 3,855 3,855
ST Portion of LT Debt 1,150 897 2,568 1,785 2,132 2,132 2,132 2,132 2,132 2,132
Convertible Senior Notes 9 0 - - - - - - - -
Deferred Revenue 763 1,015 630 1,163 1,458 1,458 1,458 1,458 1,458 1,458
Customer Deposits 664 854 793 726 752 752 752 752 752 752
Resale Value Guarantee 180 787 503 - - - - - - -
Other Current Liabilities - - - - - - - - - -
Total Current Liabilities 5,836 7,675 9,993 10,667 14,248 15,345 18,123 22,395 27,301 34,883
Non-Current Liabilities:
LT Debt 5,860 9,418 - - - - - - - -
Other LT Liabilities Net 3,153 3,838 4,100 4,183 4,835 4,508 4,557 4,358 5,608 6,427
Debt and Finance Leases, Net of Current Portion - - 9,404 11,634 9,556 9,556 9,556 9,556 9,556 9,556
Deferred Revenues Net Current Portion 852 1,178 991 1,207 1,284 1,284 1,284 1,284 1,284 1,284
Resale Value Guarantees, Less Current Portion 2,210 2,309 329 - - - - - - -
Total Non-Current Liabilities 12,075 16,743 14,824 17,024 15,675 15,348 15,397 15,198 16,448 17,267
Shareholders' Equity:
Retained Earnings (2,997) (4,974) (5,318) (6,083) (5,399) (5,358) (3,266) 1,081 6,110 14,296
Common Stock - Par Value 0 0 - 1 1 1 1 1 1 1
Additional Paid-in Capital 7,774 9,178 10,249 12,736 27,260 27,260 27,260 27,260 27,260 27,260
Accumulated Other Comprehensive Income (Loss) (24) 33 (8) (36) 363 363 363 363 363 363
Total Equity 4,753 4,237 4,923 6,618 22,225 22,266 24,358 28,705 33,734 41,920
Total Liabilities + Equity 22,664 28,655 29,740 34,309 52,148 52,959 57,878 66,298 77,484 94,070
Check - - - - - - - - - -
Cash at beginning o
Foreign Exchan
Change i
Ca
Total Assets 23,002 29,033 30,142 34,758 52,642 54,261 59,179 67,564 78,653 94,970
Non-Current Liabilities:
LT Debt 6,095 9,653 235 235 235 910 797 608 231 229
Other LT Liabilities Net 3,153 3,838 4,100 4,183 4,835 4,508 4,557 4,358 5,608 6,427
Debt and Finance Leases, Net of Current Portion - - 9,404 11,634 9,556 9,556 9,556 9,556 9,556 9,556
Deferred Revenues Net Current Portion 852 1,178 991 1,207 1,284 1,284 1,284 1,284 1,284 1,284
Resale Value Guarantees, Less Current Portion 2,210 2,309 329 - - - - - - -
Total Non-Current Liabilities 12,311 16,979 15,059 17,259 15,910 16,258 16,194 15,806 16,680 17,496
Shareholders' Equity:
Retained Earnings (2,953) (4,904) (5,218) (5,952) (5,232) (5,145) (2,998) 1,413 6,513 14,783
Common Stock - Par Value 0 0 - 1 1 1 1 1 1 1
Additional Paid-in Capital 7,774 9,178 10,249 12,736 27,260 27,260 27,260 27,260 27,260 27,260
Accumulated Other Comprehensive Income (Loss) (24) 33 (8) (36) 363 363 363 363 363 363
Total Equity 4,797 4,308 5,023 6,749 22,392 22,479 24,626 29,037 34,137 42,407
Total Liabilities + Equity 23,002 29,033 30,142 34,758 52,642 54,261 59,179 67,564 78,653 94,970
Check - - - - - - - - - -
Activities:
Proceeds from borrowings
Repayment of borrowings
Issuance of Common Stock
Total Dividends Paid
Special Dividends Paid
Other Financing Activities
Total Cash from Financing Activitie
Cash at beginning of y
Foreign Exchang
Change in
Ca
Assumptions
Transaction Inputs
Acquirer Name Tesla
Target Name Interplex
Acquirer Share Price
Target Share Price
Financial Reporting Units Millions
Currency USD
Purchase Price
Valuation Methodologies
EV/LTM Revenue 1,441
EV/LTM EBITDA 1,378
EV/Forward Revenue 1,546
EV/Forward EBITDA 1,084
DCF 1,374
Average 1,365
Median 1,378
Premium -
Enterprise Value 1,444
Uses of Cash
Cash Consideration 722
Stock Consideration 722
Target Debt - Replace 235
Acquirer Debt - Replace -
Equity Financing Fees 22
Debt Financing Fees 23
Total Uses 1,723
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the-cost-of-a-notch
Gregg Albert. (2020, November 19). Semiconductor M&A: Are rising valuations worth
it? Accenture. https://www.accenture.com/us-en/blogs/high-tech/semiconductor-valuation
Jarratt, E. (2020, November 10). Tesla acquires Canadian battery specialist, Hibar
Systems. Electric Autonomy Canada. https://electricautonomy.ca/2019/10/04/tesla-
acquires-canadian-battery-specialist-hibar-systems/
Kolodny, L. (2019, October 1). Tesla is buying computer vision start-up DeepScale in a
quest to create truly driverless cars. CNBC. https://www.cnbc.com/2019/10/01/tesla-
acquiring-deepscale-computer-vision-start-up-for-self-driving.html
KRISTINA ZUCCHI. (2021, January 15). What Makes Tesla’s Business Model Different?
Investopedia. https://www.investopedia.com/articles/active-trading/072115/what-makes-
teslas-business-model-different.asp
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batteries. Techcrunch. https://techcrunch.com/2021/05/04/tesla-taps-tiny-startups-tech-to-
build-cheaper-cleaner-batteries/
Rathi, A. (2019, February 5). Tesla bought Maxwell Technologies for $218 million, but
not for its ultracapacitors. Quartz. https://qz.com/1541864/tesla-bought-maxwell-
technologies-for-218-million-but-not-for-its-ultracapacitors/