ALFA COLLER Case Solution

ALFA COLLER Case Solution

Value of the Collar Company Using DCF Approach:

The calculation of the coller was done through the Discounted Cash flows. The discounted cash flows enclose the company’s ability to generated cash in future and their value will be discounted through an expected rate. The Revenue for the year 2005 were 42.705 million dollars that results the operating cash flows for the year 2005 as 17.838 million dollars.

The year 2005 was assumed as the base year and with the help of the values in the year 2005, the forecasted values for the next 10 years can be generated. The revenues are observed to be growing at a rate of 3 percent each year till 2013. And the terminal growth is given as 0.5 percent for the calculation of the terminal year cash flows.

The enterprise value through the discounted cash flows is predicted as $331.61 million. The Values for the cash flows are generated by taking in care the inflation rate of 1.10 percent each year. And the observed growth for the cash flows is taken as 3 percent that is same as the growth in the revenues.

2005 2006 2007 2008 2009 2010 2011 2012 2013
OPERATING CASH FLOW 17.838 18.373 18.924 19.492 20.077 20.679 21.300 21.939 22.597
INFLATION 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% 1.10% 1.10%
AFTER INFLATION 17.642 18.171 18.716 19.278 19.856 20.452 21.065 21.697 22.348
TERMINAL VALUE 363.295
NET FCF 18.171 18.716 19.278 19.856 20.452 21.065 21.697 385.643
ENTERPRISE VALUE $337.42
DEBT 5.808
EQUITY VALUE $331.61

Value of Synergies Using DCF Approach:

The synergies from the acquisition of the Coller were calculated with the consideration of factors stated in the case. The company acquiring the Coller will get benefits in term of their increase in sales. The synergies will also obtain in the decrease in cost of Raw Material and Production that is $24.61 million in year 2005 that is assumed as 64 percent of the revenues for each year calculated in the analysis.

The value for the synergy obtained in the year 2005 is calculated as 13.84 and the total value of the synergy is calculated by addition of the synergy obtained by the depreciation. The total value of the synergy is calculated as 15.04 million dollars in the year 2005.Simultaneously the synergies for the following years was calculated with an expected increase in the synergies by 3 percent.

The synergies were further discounted for the further justification of the results in terms of their present value. The Terminal value for the synergies was obtained at the end of the year 2013 that is calculated by taking a terminal factor of 0.5 percent. The terminal value from the synergy is 276.6 million dollars that results the synergies obtained at the end of year 2013 will be 293.63 million dollars. The net present value of these was calculated as $257.12 million. The net present value is calculated by taking the WACC as the discount factor for the net cash flows. The Company acquiring the COLLER will enjoy the synergies of $257.12 million.

Synergical Effects
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Revenues 39.72 36.86 38.45 39.60 40.79 41.81 42.64 43.28 43.72 43.93 43.93
Raw Material and Production Value 25.42 23.59 24.61 25.34 26.10 26.76 27.29 27.70 27.98 28.12 28.12
EBIT 14.30 13.27 13.84 14.26 14.68 15.05 15.35 15.58 15.74 15.82 15.82
Depreciation 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2
Operating Cash Flow 15.50 14.47 15.04 15.46 15.88 16.25 16.55 16.78 16.94 17.02 17.02
Terminal Value 276.6
NET FCF 15.50 14.47 15.04 15.46 15.88 16.25 16.55 16.78 16.94 17.02 293.63
Value of Synergies $257.12

…………………

This is just a sample partial work. Please place the order on the website to get your own originally done case solution

ALFA COLLER Case Solution
Share This