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Case, Interco - o FCF Go from Sales to EBIT(1-T EBIT(1-T...

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Case: Interco Issue: o City Capital wants to acquire Interco o Interco hires Wasserstein i-bank to help fend off acquisition o What is Interco really worth? Wasserstein says $68 - $80 per share o Board’s alternatives: Reject: Could then get sued by shareholders Accept Look for another merger offer For DCF need WACC and cash flows:
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Unformatted text preview: o FCF: Go from Sales to EBIT(1-T) EBIT(1-T) + Dep. – CAPEX – Inc. NWC = FCF o Calculate terminal value after year 10 o Finally, take PV of FCF to get Total Asset Value (discount at WACC) o Get Total Equity Value o Figure out accurate value per share...
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