Mergers and Acquisitions:
Company = Acquisition of Activision Blizzard and Microsoft
What needs to be done:
Recommendation: From the perspective of the bidder (Microsoft) , indicate whether you are for or against the merger at the offer price, given information known at the time of the bid. This must include a valuation of the target firm (Activision Blizzard), as well as an assessment of synergies.
Rubric given by professor: Provides multiple valuation techniques resulting in confident conclusions.Supports with both quantitative and qualitative reasoning.
Important parts of the Recommendation must include:
1) Detailed numerical analysis of expected synergies
2) Benchmarking Analysis: Valuation of Target (Activision Blizzard) using comparable companies analysis. These companies can include: Electronics Arts and Nintendo
3) Valuation of Target (Activision Blizzard) Using Discounted Cash Flow Analysis (DCF). Find Present Value of Free Cash Flow for 5-year projected period using Activision Blizzard Financial Statements. Must calculate WACC (weight Average cost of Capital) and cost of equity using relevered beta
4)Finally: Compare enterprise value found from DCF analysis and compare with the price they actually paid: $95.00 per share, valued at $68.7 billion.
I have attached a PDF file of another project, which is a good example of what needs to be done. Only look at pages 26-32 for what needs to be done.
Include Graphs of calculations, as example PDF example attached (pages 26-32 ONLY)
Calculations can be done on EXCEL to make it easier and transferred to WORD doc with theoretical explanation, as well.
Please include all sources used. Financial figures should all be obtained from: https://www.activisionblizzard.com/annual-reports.
Assume a constant growth rate in order to project sales for free cash flow.