Youku and Tudou M&a Case Solution
Mini Case 3 The Merger between Youku and Tudou
Basic Information of Tudou Items | Data | Yield on US long-term government bonds | 3.50% | Risk premium | 7.50% | Beta of Tudou | 1.35 | Required return rate of equity | 13.62500% | Required return rate of debt | 7.50% | Leverage ratio | 0.2 | Weighting of debt | 0.2 | Weighting of equity | 0.8 | Marginal tax rate | 25% | Growth rate | 6% | WACC | 12.025% | Number of shares | 91 |
The required return rate of equity:
WACC
(1) (2) Stand-alone value per share (FCF) | Actual | Forecast | | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | | Net Revenue | | | | | | | | | | | | Online Advertising Service | 454.00 | 996.00 | 1595.00 | 1750.00 | 2492.00 | 3303.00 | 4115.00 | 4842.00 | 5410.00 | 5722.00 | | Mobile Video Service | 58.00 | 131.00 | 203.00 | 285.00 | 440.00 | 629.00 | 843.00 | 1063.00 | 1269.00 | 1431.00 | | Total Revenue | 512.00 | 1127.00 | 1798.00 | 2035.00 | 2932.00 | 3932.00 | 4958.00 | 5905.00 | 6679.00 | 7153.00 | | Cost of Revenue | -415.00 | -845.25 | -1258.60 | -1424.50 | -1964.44 | -2516.48 | -3073.96 | -3661.10 | -4140.98 | -4434.86 | | Gross Profits | 97.00 | 281.75 | 539.40 | 610.50 | 967.56 | 1415.52 | 1884.04 | 2243.90 | 2538.02 | 2718.14 | | Operating Expenses | -256.00 | -619.85 | -773.14 | -712.25 | -879.60 | -1061.64 | -1189.92 | -1299.10 | -1469.38 | -1573.66 | | Depreciation & Amortization | 18.00 | -28.00 | -39.00 | -39.00 | -40.00 | -41.00 | -41.00 | -41.00 | -41.00 | -41.00 | | EBIT | -141.00 | -366.10 | -272.74 | -140.75 | 47.96 | 312.88 | 653.12 | 903.80 | 1027.64 | 1103.48 | | Working Capital Investment | | -209.10 | -201.30 | -66.36 | -233.22 | -240.00 | -225.72 | -189.40 | -154.80 | -94.80 | | Capital Expenditures | | -70.00 | -78.00 | -66.30 |
Basic Information of Tudou Items | Data | Yield on US long-term government bonds | 3.50% | Risk premium | 7.50% | Beta of Tudou | 1.35 | Required return rate of equity | 13.62500% | Required return rate of debt | 7.50% | Leverage ratio | 0.2 | Weighting of debt | 0.2 | Weighting of equity | 0.8 | Marginal tax rate | 25% | Growth rate | 6% | WACC | 12.025% | Number of shares | 91 |
The required return rate of equity:
WACC
(1) (2) Stand-alone value per share (FCF) | Actual | Forecast | | | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 | | Net Revenue | | | | | | | | | | | | Online Advertising Service | 454.00 | 996.00 | 1595.00 | 1750.00 | 2492.00 | 3303.00 | 4115.00 | 4842.00 | 5410.00 | 5722.00 | | Mobile Video Service | 58.00 | 131.00 | 203.00 | 285.00 | 440.00 | 629.00 | 843.00 | 1063.00 | 1269.00 | 1431.00 | | Total Revenue | 512.00 | 1127.00 | 1798.00 | 2035.00 | 2932.00 | 3932.00 | 4958.00 | 5905.00 | 6679.00 | 7153.00 | | Cost of Revenue | -415.00 | -845.25 | -1258.60 | -1424.50 | -1964.44 | -2516.48 | -3073.96 | -3661.10 | -4140.98 | -4434.86 | | Gross Profits | 97.00 | 281.75 | 539.40 | 610.50 | 967.56 | 1415.52 | 1884.04 | 2243.90 | 2538.02 | 2718.14 | | Operating Expenses | -256.00 | -619.85 | -773.14 | -712.25 | -879.60 | -1061.64 | -1189.92 | -1299.10 | -1469.38 | -1573.66 | | Depreciation & Amortization | 18.00 | -28.00 | -39.00 | -39.00 | -40.00 | -41.00 | -41.00 | -41.00 | -41.00 | -41.00 | | EBIT | -141.00 | -366.10 | -272.74 | -140.75 | 47.96 | 312.88 | 653.12 | 903.80 | 1027.64 | 1103.48 | | Working Capital Investment | | -209.10 | -201.30 | -66.36 | -233.22 | -240.00 | -225.72 | -189.40 | -154.80 | -94.80 | | Capital Expenditures | | -70.00 | -78.00 | -66.30 |