2 3 4 5 6 7 8 9 11 Sun Microsystems Case Analysis Video Report Group Assignment Mergers & Acquisitions Introduction (Objective of the Assignment) Case: Sun Microsystems calls for students to reevaluate the price Oracle should pay to acquire its long-term business partner, Sun Microsystems. The emergence of new sitors (eg, IBM) forces Oracle's corporate development team to go back to the drawing board and reevaluate all the assumptions they have made in putting together the initial bid of $7.38 billion, or $9.50 per share, on April 17, 2009 Students are invited to value Sun's stock and take a position on whether there is any room left to sweeten the offer if a bidding war unfolds. The case outlines the Oracle strategy and how long-term partnering with San contributed to it to date. It also allows for an in-depth discussion of the changing competitive landscape of the technology industry. The case is an exercise in valuing a potential acquisition target. It presents an opportunity for students to develop appreciation for valuing a company using both discounted cash flow and multiples in their analysis. Particular attention should be paid to the inclusion of synergies and their relevance to the valuation. The bidding dimensions of the case are highlighted by the presence of other potential acquiren Assignment Requirements Students will read Case: Sun Microsystems (HBR) and will create a 10 minute presentation video response with their Pitchbook Presentation group. The Case Study method is somewhat subjective and open to interpretation. Here are a few questions you should consider. 1. Is Sun Microsystems a good strategic fit for Oracle? 2. What approaches would you use to place a value on Sun Microsystems? 3. Assuming a discounted cash flow valuation a What rate of return should Oracle require on the acquisition? b. What base-case cash flows do you forecast? c. What is your estimate of terminal value? d. What is the enterprise value of Sun Microsystems? What is the equity value? 4. Conduct a multiples analysis to value Sun. What economic fundamentals are reflected in the multiples? 5. Identify the synergies and conduct a sensitivity analysis to estimate the effect of synergies on enterprise value