Part 2/2

Method options are

• Book value of equity method
• discounted cash flow method
• Market value of equity method
• Multiples-based method - Earnings
• Mutliples-based method - free cash flow
• Multiples-based method - sales

Brooks Plumbing Products Incorporated (BPP) manufactures plumbing fixtures and other home improvement products that are sold in Home Depot and Walmart as well as hardware stores. BPP has a solid reputation for providing value products, good quality, and a good price. The company has been approached by an investment banking firm representing a third company, Garden Speclaltles Incorporated (GS), that is interested in acquiring BPP. The acquiring firm (GSl) is a retaller of garden supplies; it sees the potential synergles of the combined firm and Is willing to pay BPP shareholders $38 cash per share for thelr stock, which is greater than the \begin{tabular}{|l|l|l|l|} \hline 4. & Discounted cash flow method & & \\ \hline 5. & Which of the methods would you use? & & \\ \hline 6. & Is the GSI offer a good one? & \\ \hline \end{tabular}