Value of Collar for Alfa with Synergy

The value of Collar for Alfa is calculated including synergies generated from various sources. The valuation would help the company in taking effective decision about acquisition in the future.The terminal value is derived incash flows from the fiscal year 2003 to 2013.

The value for the organization after consideration of the synergy stands at Euro 58.484 Million.

The calculation for the synergetic values is provided below:

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Growth Rates 1.50% 3.00% 3.00% 3.00% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.25%
Revenue from Collar’s Products 32,897 33,390 34,392 35,424 36,487 37,581 38,521 39,291 39,881 40,279 40,481 40,582
Revenue from Commercialized Products 4,660
Net Revenues 37,557 33,390 34,392 35,424 36,487 37,581 38,521 39,291 39,881 40,279 40,481 40,582
Variation in the Inventory Of Finished Good 216 219 226 233 240 247 250 254 258 262 266 270
Cost of Commercialized Products (3,883)
Value of Manufactured Goods 33,890 33,610 34,618 35,657 36,726 37,828 38,771 39,545 40,139 40,541 40,747 40,852
Cost of Purchases (22,479) (20,494) (21,109) (21,742) (22,394) (23,066) (23,641) (24,113) (24,475) (24,720) (24,845) (24,910)
Variation in the Inventory Of Raw Materials 175 178 183 188 194 200 205 209 212 214 215 216
Other Cost to Outsiders (3,977) (4,722) (4,864) (5,010) (5,160) (5,315) (5,447) (5,556) (5,639) (5,696) (5,725) (5,740)
Personnel Costs (3,089) (2,907) (2,994) (3,084) (3,176) (3,271) (3,353) (3,420) (3,471) (3,506) (3,524) (3,533)
EBITDA 4,520 5,665 5,835 6,010 6,190 6,376 6,535 6,665 6,765 6,833 6,868 6,886
Depreciation and Amortization (976) (976) (976) (976) (976) (976) (976) (976) (976) (976) (976) (976)
Operating Income (EBIT) 3,544 4,689 4,859 5,034 5,214 5,400 5,559 5,689 5,789 5,857 5,892 5,910
tax @ 43% (2,016) (2,089) (2,165) (2,242) (2,322) (2,390) (2,446) (2,489) (2,519) (2,533) (2,541)
Earnings after Tax 2,673 2,770 2,869 2,972 3,078 3,169 3,243 3,300 3,339 3,358 3,368
add: Depreciation and Amortization 976 976 976 976 976 976 976 976 976 976 976
Net Cash flows 3,649 3,746 3,845 3,948 4,054 4,145 4,219 4,276 4,315 4,334 4,344
WACC @ 7.17% 0.933 0.871 0.812 0.758 0.707 0.660 0.616 0.575 0.536 0.500 0.467
Discounted Cash flows 3,405 3,261 3,124 2,993 2,868 2,736 2,598 2,457 2,314 2,169 2,028
Terminal Value 30,561
Present Value 58,484

 

The positive terminal value indicates that the company would be able to forecast the future cash flows easily. The assumptions used for the purpose of capturing value are discussed below;

Determination of free cash flows:

Terminal value interest rate: For calculating terminal value, the growth rate is assumed to be 0.5% for perpetuity.

 

Valuation of COLLAR compare with valuations of comparable companies

 

Equity Value of Collar without Synergy: 54.228 Million Euros

Equity Value of Collar with Synergy: 58.484 Million Euros

Market Value through Market Comparable:

Equity Value: 54.228 Million

Enterprise Value: 54.228 + 8.415 (2002 – Net Debt) = 62.643 Million

ENT Value/Value of Production= 62.643/33.890 (2002 Value of Prod.) = 1.848

ENT Value/ EBITDA: 62.643/4.520 = 13.859

ENT Value/ EBIT: 62.643 / 3.544 = 17.68

Equity Value / Net Income: 54.228 / 1.698 = 31.93

Equity Value / Shareholder Equity: 54.228 / 17.256 = 3.14……………………

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