Valuation Hp Merger

Satisfactory Essays

Open Document

Open Document

View Writing Issues

260 Words

Grammar

Grammar

Plagiarism

Plagiarism

Writing

Writing

Score

Score

Valuation Hp Merger

Robert F. Bruner, APPLIED MERGERS AND ACQUISITIONS http://www.authorstream.com/Presentation/aSGuest43708-380676-hp-compaq-merger-analysis-entertainment-ppt-powerpoint/ 12
23
Carly’s Big Party Plans 5.0% sales erosion 8.1% EBIT margin (resulting from $2.5BN cost savings) 7.0% net income margin 10.7% ROC Post-merger share price: $24.85
Synergy Calculations
HWP Intrinsic Firm Value 3 6,695,889
CPQ Intrinsic Firm Value 10,682,654
Value of HWP + CPQ without Synergy 4 7,378,542
Value of HWP + CPQ with Synergy 8 2,564,626
Value of Synergy 35,186,083
Price Paid by HWP 2 5,000,000
Increase in Value from Merger 10,186,083 walter 15.0% sales erosion 5.2% EBIT margin 4.7% net income margin 7.2% ROC Post-merger share price: $15.49
Synergy Calculations
HWP Intrinsic Firm Value 3 6,695,889
CPQ Intrinsic Firm Value 1 0,682,654
Value of HWP + CPQ without Synergy 4 7,378,542
Value of HWP + CPQ with Synergy 5 4,295,049
Vale of Synergy 6,916,507
Price Paid by HWP 2 5,000,000
Increase in Value from Merger (18,083,493)

http://mmoore.ba.ttu.edu/ValuationReports/Fall2006/HewlettPackard.pdf http://people.stern.nyu.edu/adamodar/pdfiles/papers/synergy.pdf http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/AcqValn.pdf http://www.hp.com/hpinfo/newsroom/press/2001/010904a.html www.philiplarson.com/docs/corpfinance-hpcompaq.doc
http://www.exinfm.com/free_spreadsheets.html

Continue Reading

You May Also Find These Documents Helpful

Better Essays
LDR 300 Week 5 Team Assignment Merger Dilemma Paper
- 999 Words
- 3 Pages
LDR 300 Week 5 Team Assignment Merger Dilemma Paper

References: Lubatkin, M. (1983), ``Mergers and the performance of the acquiring firm ' ', Academy of Management Review, Vol. 8 No. 2, pp. 218-25. Retrieved 2012-02-03…
- 999 Words
- 3 Pages
Better Essays

Read More
Good Essays
Worldcom Case: Bankruptcy Protection
- 945 Words
- 4 Pages
Worldcom Case: Bankruptcy Protection

The dominant value creating function is the main reason for the firm engagement in inorganic growth. Through this mode of growth, the firm improved the value of shareholders since the power and efficiency of the merged companies are better than the individual companies working separately. As a result, the value was captured in the anticipated synergies where the results of these mergers were evident based on the accelerated growth in revenues, profits, and assets. In addition, the mergers, especially the merger between world com and MCI, brought together two firms that have complementary strengths and assets (Hitt & Harrison, 2001). Through these mergers, the shareholders’ value was improved through operational cost reduction including, the reduction in reduced leased lined costs, and elimination of expensive terminal charges both locally and internationally. Also, the mergers eliminated duplication of activities and investments, adoption of best practices while sales and marketing forces have meshed thus making the established market channel to be better established. Moreover, the mergers and acquisitions helped the firm minimize the competition in the market, instantly add new brands to the firm’s product portfolio, instant access to fresh customer base and expansion to new geographical locations, gaining economies of scale over a reduced period of time, injection of new and diversified management skills and significant reduction of time to market thus giving the firm the competitive advantage (Gaughan, 2013). All these merger outcomes are value-adding since they enable merger process meet the characteristic of the value adding…
- 945 Words
- 4 Pages
Good Essays

Read More
Satisfactory Essays
Euro takeover
- 474 Words
- 2 Pages
Euro takeover

• Bidders (Raider, LBO, W.K.) ( , , ) – What is your walkway price, i.e. highest price willing to pay? • Banks – Credit rating, interest rate – Lending limit & Structure Credit Analysis • Evaluate post‐merger credit worthiness – Statutory vs. subsidiary merger – Post merger cash flow • How much synergy to include? How much synergy to include? – Post merger debt level 2 Capital Structure • Senior Debt – – – – Term loans & Revolving credit…
- 474 Words
- 2 Pages
Satisfactory Essays

Read More
Good Essays
The Hewlett-Packard and Compaq Merger Analysis
- 1206 Words
- 5 Pages
The Hewlett-Packard and Compaq Merger Analysis

HP entered into an agreement with Compaq Computer Corporation in September 2001. In this definitive agreement, HP is going to purchase all of Compaq’s common shares outstanding, and pay a total price of 0.6325 shares of its common stock for each share of Compaq’s common stock.…
- 1206 Words
- 5 Pages
Good Essays

Read More
Better Essays
Hcs/514 Merger Analysis
- 1642 Words
- 7 Pages
Hcs/514 Merger Analysis

The intent of this memo is to address the importance of communication within the company and the merger impact of organizational culture on products and services. This memo also will explain organizational behavior and how it affects quality, competition, and human relations, and how job design, work processes. Additionally, this memo will explain how performance expectations can affect organizational outcomes. Last, this memo will highlight strategies that…
- 1642 Words
- 7 Pages
Better Essays

Read More
Satisfactory Essays
Jet Blue IPO Valuation
- 1218 Words
- 5 Pages
Jet Blue IPO Valuation

JetBlue is a company that was founded on not accepting the status quo with regard to how airline travel is “supposed to be”. Recent history shows that low-fare airlines are gaining momentum, and JetBlue’s business model sets us apart- our fleet is newer, more reliable and efficient. We offer the lowest cost per available seat mile than any other U.S. airline, and we do it while maintaining high quality, customer- focused service. By raising equity through a public offering, JetBlue has the opportunity to support the current growth trajectory and offset portfolio losses, thus putting us in an advantageous position for future development. The following report details some of the advantages of going public as well as the potential pitfalls, while outlining a price per share approach based on terminal value and market multiples. Finally, it discusses the ramifications of setting a price under the expected market price and ultimately suggests a potential IPO price.…
- 1218 Words
- 5 Pages
Satisfactory Essays

Read More
Better Essays
Computech Company Case Mergers&Acquisitions
- 4229 Words
- 17 Pages
Computech Company Case Mergers&Acquisitions

Marco Garibaldi was a computer hacker and began to develop computer programs in the basement of his parents’ home. His first software program named as “WordPro” aroused great interest among the academic and the business communities. That was the story behind the establishment of “CompuTech Industries” in 1983. The company went to public in 1990 for the first time. By the end of 1995, CompuTech’s stock price was $25 per share and its outstanding shares were 10,000,000.…
- 4229 Words
- 17 Pages
Better Essays

Read More
Better Essays
Gm Merger Acquisition
- 717 Words
- 3 Pages
Gm Merger Acquisition

Companies often implement corporate-level acquisition strategies to achieve product diversification that can build core competencies. In fact, acquisition strategy is the most common means of implementing diversification. For each strategy discussed in the book, including diversification and merger and acquisition strategies, the company creates value only when its resources, capabilities, and core competencies are used productively.…
- 717 Words
- 3 Pages
Better Essays

Read More
Good Essays
Net Present Value, Mergers and Acquisitions
- 874 Words
- 4 Pages
Net Present Value, Mergers and Acquisitions

When brainstorming on the possible ideas of mergers or acquisitions it was easy at first to automatically think similar corporations within the same market either small or big or even in direct competition. Upon researching and reviewing the required readings I realized there are numerous types of mergers and acquisitions that could and should be considered in the terms of better business for my company (Target), for the market, and for the consumers in general.…
- 874 Words
- 4 Pages
Good Essays

Read More
Better Essays
Net Present Value, Mergers and Acquisitions
- 1391 Words
- 6 Pages
Net Present Value, Mergers and Acquisitions

One financial goal of financial managers is to maximize the shareholders’ wealth. Therefore, merger and acquisition decisions should be consistent with shareholder wealth maximization, and financial characteristics of the targets to consider in the decision-making process. The net present value method is one of the useful methods that help financial managers to maximize shareholders’ wealth. The capital budgeting decision mergers Acquisitions…
- 1391 Words
- 6 Pages
Better Essays

Read More
Powerful Essays
Ipo Valuation Case
- 5325 Words
- 22 Pages
Ipo Valuation Case

JETBLUE AIRWAYS IPO VALUATION My neighbor called me the other day and she said, 'You have an interesting little boy. ' Turns out, the other day, she asked my son Daniel what he wanted for Christmas. And he said, 'I want some stock. ' 'Stock? ' she said. 'Don 't you want video games or anything? ' 'Nope, ' he said, 'I just want stock. JetBlue stock. ' --David Neeleman, CEO and Founder, JetBlue Airways It was the first week of April 2002, barely two years since the first freshly-painted JetBlue plane rolled out at the company’s home base at New York City’s John F. Kennedy (JFK) Airport. JetBlue’s first years had been good ones. Despite the challenges facing the U.S. airline industry following the aircraft terrorist attacks of September 2001, the company remained profitable and was growing aggressively. To support their growth trajectory and offset portfolio losses by their venture capital investors, management had accelerated the decision to raise additional capital through a public equity offering. Exhibits 1 through 4 provides selections from JetBlue’s initial public offering (IPO) prospectus, the name for the document required by the SEC to inform investors about the details of the equity offering. With less than a week to go until the offering, JetBlue management was preparing for a meeting with IPO co-lead manager, Morgan Stanley. The initial price range for JetBlue shares had originally been targeted at between $22 to $24. Facing sizeable excess demand for the 5.5 million shares planned in the IPO, the JetBlue management team was considering whether to support an increase in the offering price of the new shares.…
- 5325 Words
- 22 Pages
Powerful Essays

Read More
Satisfactory Essays
merger& acquistion
- 303 Words
- 2 Pages
merger& acquistion

Nextel communications Inc was established in 1987 its first name was Fleet Cell and changed to Nextel communication Inc in 1993. Nextel communication basically provided a wireless service to its customer .it was a publically traded company and its share were traded under the ticker name of Nextel on NASDAQ.…
- 303 Words
- 2 Pages
Satisfactory Essays

Read More
Powerful Essays
Total Cost of Acquisition
- 2188 Words
- 9 Pages
Total Cost of Acquisition

For instance negotiating for a job with Boeing while handling a major negotiation for a major contract…
- 2188 Words
- 9 Pages
Powerful Essays

Read More
Good Essays
Hp-Compaq M&a
- 3673 Words
- 15 Pages
Hp-Compaq M&a

Executive Summary. The world’s largest corporate Information Technology merger began in September 2001 when HP announced that they would acquire Compaq in an all stock purchase valued at $25 billion. Over an 8 month period ending in May 2002, the merger passed shareholder and regulatory approval with the end result being one company. The new HP has annual sales of approximately $90 billion which is comparable to IBM, and an operating incom e of almost $4 billion. The merger was led by Carly Fiorina, the chairwoman and CEO of HP. The president of the new HP was Michael Capellas who was the former chairman and CEO of the old HP and who has recently resigned and is now the CEO of World Com. Overall, many analysts were critical of the merger from the beginning since both Compaq and HP were struggling companies before the merger. The common question that has been raised by analysts is: Do two struggling companies make a better merged company? Some analysts have indicated that the merger is a gamble and that it is difficult to see any focussed logic behind the merge considering that most I.T acquisitions are not successful. Prior to the merger, Compaq has been unable to grow despite previously buying Digital, while HP was trying to grow internally, without much success. Both companies were still adjusting to acquisitions they have made in the past and both were adjusting to new leadership (Fiorina and Capellas). The merger deal also means that there are many overlaps in products, technologies, distribution channels, services, facilities and jobs. Employee morale is a threat to a successful merger as there has been numerous layoffs -15,000 employees. The claimed annual cost savings of about $2.5 billion dollars by the year 2004 amounts to only 3 % of the combined costs of both companies. Gartner Group research has indicated that the merged company has failed to do a good enough job of presenting the…
- 3673 Words
- 15 Pages
Good Essays

Read More
Powerful Essays
Merger in Joint Stock Companies
- 1482 Words
- 6 Pages
Merger in Joint Stock Companies

Mergers or amalgamation, result in the combination of two or more companies into one, wherein the merging entities lose their identities. No fresh investment is made through this process. Howeverof shares takes place between the entities involved in such a process. Generally, the company that survives is the buyer which retains its identity and the seller company is extinguished. A merger can also be defined as an amalgamation if all assets and liabilities of one company are transferred to the transferee company in consideration of payment in the form of equity shares of the transferee company or debentures or cash or a mix of the above modes of payment. An acquisition, on the other hand, is aimed at gaining a controlling interest in the share capital of acquired company. It can be enforced through an agreement with the persons holding a majority interest in the company's management or through purchasing shares in the open market or purchasing new shares by private treaty or by making a take-over offer to the general body of shareholders. Joint stock company is the most dominant business form for organised and large industrial and commercial activities. The corporate and industrial sectors are in a sense inseparable as a substantial part of organised industrial activity is conducted by joint stock companies. Questions like what to produce, how much to invest, where to raise finances from, how much to spend on R&D and advertisement, where to get technology from, at what price to sell and in which markets, how to diversify, etc. are decided at company level and not by the factory management. Joint stock companies also undertake a variety of services ranging from transport, distribution, finance, health and media. The corporate sector is important for mobilizing and utilising household savings for making new investments. It is a major recipient as well as supplier of foreign investment.…
- 1482 Words
- 6 Pages
Powerful Essays

Read More

Related Topics

Mergers and acquisitions