Solution 1 Acquisition Analysis Problem 21 1 Vandell s free cash flow FCF0 is 2 million per year and is expected to grow at a constant rate of 5 a Solution Acquisition Analysis Problem Vandell s free cash flow FCF is million per year and is expected to grow at aSolution Acquisition Analysis Problem Vandell s free cash flow FCF is million per year and iss free cash flow FCF is million per year and is expected to grow at a constant rate of aSolution Acquisition Analysis Problem Vandell s free cash flow FCF is million peryear and is expected to grow at a constant rate of aSolution Acquisition Analysis Problem Vandell s free cash flow FCFSolution Acquisition Analysis Problem Vandell
(Solution) 1 - Acquisition Analysis - Problem 21-1 Vandell's free cash flow (FCF0) is $2 million per year and is expected to grow at a constant rate of 5% a...
No. 1 – Acquisition Analysis – Problem 21-1
Vandell’s free cash flow (FCF0) is $2 million per year and is expected to grow at a constant rate of 5% a year; its beta is 1.4. What is the value of Vandell’s operations? If Vandell has $10.82 million in debt, what is the current value of Vandell’s stock?
No. 2 – Acquisition Analysis – Problem 21-1 extended
Using your answer to Problem 21-1, assuming a current market stock price for Vandell of $16.00 per share, what price per share will likely be required to complete a deal assuming current shareholders require a 30% premium to tender their shares?
What would be the NPV of the deal to the acquirer at this required price for Vandell if the acquirer will incur $3 Million in after-tax transaction costs? (assume the transaction costs all occur immediately at the closing of the deal).
At what deal price per share does the transaction no longer make sense for the acquirer?