FIN3CSF Semester 1, 2024 - Case Study 1 Merger Earnings Valuation Model (Figures in US$ Million)...

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FIN3CSF Semester 1, 2024 - Case Study 1 Merger Earnings Valuation Model (Figures in US$ Million) Account Item Operating Revenue Cost of Goods Sold (inc D&A) Gross Income SG&A Expenses Depreciation and Amortisation Operating Income (EBIT) Non-operating Income Net Interest Expense Income Before Tax Income Tax Expense Net Income for Shareholders Discount factor Present value of earnings cash flow Total intrinsic valuation as at January 1st 2024 Total intrinsic valuation as at February 25th 2024 Company information at the time of merger negotiation Walt Disney Company Issued capital Beta coefficient 1834.00 1.09 Market capitalisation as at February 25th 2024 197,595.16 Share price as at February 25th 2024 107.74 Netflix Inc Issued capital 432.80 Beta coefficent Share price as at February 25th 2024 1.25 Market capitalisation as at February 25th 2024 252,564.77 583.56 Walt Disney Company September 2023 Actual 88,898 Netflix Inc Merged Entity Merged Entity Merged Entity 33,723 122,621 131,204 144,325 59,201 19,715 78,916 86,018 92,900 Merged Entity December 2023 Actual December 2023 Act December 2024 Foreca December 2025 Foreca December 2026 Foreca 2027 onwards Merged Entity Parameters Beta coefficient Risk-free rate of return (in decimals) Merged Entity 159,479 100,332 29,697 14,008 43,705 45,186 51,425 59,147 15,336 7,054 22,390 26,181 25,390 27,490 5,369 5,369 5,637 5,835 6,010 Expected market return (in decimals) Cost of equity Earnings growth forecast (in decimals) 1.1798 0.0000 0.0000 0.0000 0.0000 8,992 6,954 15,946 13,367 20,200 25,647 -3,014 -49 -3,063 -2,863 -2,713 -2,613 1,209 700 1,909 2,100 2,268 2,449 Ownership share for Walt Disney Company (in decimals) 0.0000 4,769 6,205 10,974 8,404 15,219 20,585 Market value of ownership share #DIV/O! 1,379 797 2,176 1,975 3,576 4,837 Equivalent merger value per share #DIV/O! 3,390 5,408 8,798 6,429 11,643 15,747 #DIV/O! Ownership share for Netflix Inc (in decimals) 1.0000 1.0000 6,429.43 1.0000 11,642.60 1.0000 15,747.32 Market value of ownership share #DIV/O! Equivalent merger value per share 0.0000 #DIV/O! #DIV/O! #DIV/O! #DIV/O! FIN3CSF Semester 1, 2024 - Case Study 1 Merger Earnings Valuation Model (Figures in US$ Million) Account Item Operating Revenue Cost of Goods Sold (inc D&A) Gross Income SG&A Expenses Depreciation and Amortisation Operating Income (EBIT) Non-operating Income Net Interest Expense Income Before Tax Income Tax Expense Net Income for Shareholders Discount factor Present value of earnings cash flow Total intrinsic valuation as at January 1st 2024 Total intrinsic valuation as at February 25th 2024 Company information at the time of merger negotiation Walt Disney Company Issued capital Beta coefficient 1834.00 1.09 Market capitalisation as at February 25th 2024 197,595.16 Share price as at February 25th 2024 107.74 Netflix Inc Issued capital 432.80 Beta coefficent Share price as at February 25th 2024 1.25 Market capitalisation as at February 25th 2024 252,564.77 583.56 Walt Disney Company September 2023 Actual 88,898 Netflix Inc Merged Entity Merged Entity Merged Entity 33,723 122,621 131,204 144,325 59,201 19,715 78,916 86,018 92,900 Merged Entity December 2023 Actual December 2023 Act December 2024 Foreca December 2025 Foreca December 2026 Foreca 2027 onwards Merged Entity Parameters Beta coefficient Risk-free rate of return (in decimals) Merged Entity 159,479 100,332 29,697 14,008 43,705 45,186 51,425 59,147 15,336 7,054 22,390 26,181 25,390 27,490 5,369 5,369 5,637 5,835 6,010 Expected market return (in decimals) Cost of equity Earnings growth forecast (in decimals) 1.1798 0.0000 0.0000 0.0000 0.0000 8,992 6,954 15,946 13,367 20,200 25,647 -3,014 -49 -3,063 -2,863 -2,713 -2,613 1,209 700 1,909 2,100 2,268 2,449 Ownership share for Walt Disney Company (in decimals) 0.0000 4,769 6,205 10,974 8,404 15,219 20,585 Market value of ownership share #DIV/O! 1,379 797 2,176 1,975 3,576 4,837 Equivalent merger value per share #DIV/O! 3,390 5,408 8,798 6,429 11,643 15,747 #DIV/O! Ownership share for Netflix Inc (in decimals) 1.0000 1.0000 6,429.43 1.0000 11,642.60 1.0000 15,747.32 Market value of ownership share #DIV/O! Equivalent merger value per share 0.0000 #DIV/O! #DIV/O! #DIV/O! #DIV/O!