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  • Task 4 - Template - Revised

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    Ishita
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    The email provides a pre-fire and post-fire valuation of a company using the perpetuity growth method. The pre-fire valuation implied an equity value of $718 million and offer share price of $361, representing a 118.8% premium over the current price. The post-fire valuation implied significantly lower equity value of $233 million and offer share price of $117, representing a 29% discount to the current price. The management is advised to consider this new valuation in their decision about a deal closing later in the quarter.

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    The email provides a pre-fire and post-fire valuation of a company using the perpetuity growth method. The pre-fire valuation implied an equity value of $718 million and offer share price of $361, representing a 118.8% premium over the current price. The post-fire valuation implied significantly lower equity value of $233 million and offer share price of $117, representing a 29% discount to the current price. The management is advised to consider this new valuation in their decision about a deal closing later in the quarter.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    70 views1 page

    Task 4 - Template - Revised

    Uploaded by

    Ishita
    The email provides a pre-fire and post-fire valuation of a company using the perpetuity growth method. The pre-fire valuation implied an equity value of $718 million and offer share price of $361, representing a 118.8% premium over the current price. The post-fire valuation implied significantly lower equity value of $233 million and offer share price of $117, representing a 29% discount to the current price. The management is advised to consider this new valuation in their decision about a deal closing later in the quarter.

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    © All Rights Reserved
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    of 1

    Provide an investment recommendation

    Email to management

    Hi Anna
    These are the valuation of the company by perpetuity growth method pre and post fire .
    As the deal is expected to close on later this quarter this might help to take the further decision.

    Net present value based on perpetuity growth method


    Preliminary valuation Revised valuation (post-fire)
    Value Based on 8.5% WACC & 0.5% TGR Amount ($m) % of NPV Value Based on 8.5% WACC & 0.5% TGR Amount ($m) % of NPV
    Present Value of Cash flows 409 50.9% Present Value of Cash flows (76) 24.0%
    PV of Terminal Value 394 49.1% PV of Terminal Value 394 124.0%
    Implied Firm NPV  803 100.0% Implied Firm NPV  318 100.0%
    Net debt as of Mar-20E (85)
    Net debt as of Mar-20E (85)
    Implied equity value  718  
    Implied equity value  233  
    Implied offer share price (c) 361
    Implied offer share price (c) 117
    % premium to current 118.8%
    % premium to current (29.0%)

    Source: Company Business Plan (January 2020); Equity research; J.P. Morgan analysis

    WORLDWIDE BREWING 1

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