32 if oracle will acquire sun microsystems certain

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the multiples price per share will give a result of $16.32. If Oracle will acquire Sun Microsystems, certain synergies would appear; o Oracle will be able to utilize Sun’s Java in their own portfolio to create many of their applications. o By adding MySQL to Oracle company this will help them in adding smaller cliental to their customer base. o This acquisition will help Oracle to expand its products lines and risks o There will be a combination of both companies Research and Development (R &D) and also their sales teams. The below table shows the sensitivity analysis for the two approaches: Stand-Alone Sensitivity Analysis: Synergy Value Sensitivity Analysis:
21 The sensitivity analysis for the synergy values using both the two methods perpetuity growth method (PGM) and the exit multiple method (EMM) show a higher enterprise value then the stand alone valuation preformed. Summary of Results: Based on the above sensitivity analysis, what can be seen is that in the Stand-Alone (Base Case) using the perpetuity method which gave us an enterprise value of 3,653 million and an equity value of 5,465 million which resulted in a price of $7.40 per share which is close to the price per share of Sun Microsystems. Also, what can be noticed when we used the multiple method for the Stand-Alone (Base Case) we got $9.44 price per share which has a difference of only $2.75 ($9.44-$6.69). Therefore, the synergies valuation method was used to receive the accurate results of share price. The synergy using perpetuity method which has an enterprise value of 7,632 million and an equity value of 9,444 million resulted in a $12.79 price per share. In addition, when using the multiple method for the synergy the price per share of $16.32 shows a major difference between Sun Microsystems and Oracle’s offer price. Enterprise Value Equity Value Price per share Stand-Alone (Base-Case) using the Perpetuity method 3,653 million 5,465 million $7.40 Stand-Alone (Base- Case) using the Multiples method 5,161 million 6,973 million $9.44 Synergy using the Perpetuity method 7,632 million 9,444 million $12.79 Synergy using the Multiple method 10,238 million 12,050 million $16.32 Comparable Company method $13.06 Oracle’s offer price $9.50 Sun Microsystem (Current Share Price) $6.69
22 6. If a competing bidder appears, how high a price should Oracle be willing to offer?
23companies’ analysis (CCA) and the price offered by Oracle are both contained within thesuggested range (prices are $13.06 and $9.50 respectively).All in all, we decided that the optimum price that should be proposed by Oracle is$11.38. This value was computed by finding the average of all the prices represented abovealong with the amount that is offered by Oracle ((8.42+14.55+13.06+9.50)/4= $11.38).7-

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