UFC Valuation

8/10/2019 UFC Valuation

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F &

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?

:

4

T C

T C

SP

D C F A (DCF)

$

2


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?

Acquisitions:

How much should wepay for the company?

Divestitures:

How much should wesell our company for?

Valuation

Sell-side Research:

Should our clients buy,sell or hold a givenstock (fixed income

security, option etc.,)?

Hostile defense:

Is our companyundervalued/vulnerable

to a hostile bidder?

Debt offerings:

What is the value of thecompany against whichdebt is being issued?

(collateral)

Initial Public Offering(IPO):

How much is thecompany worth?(price per share )

3


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C

4


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A

M: C T ( M)

T: S ( )

D P G ( )

P

C CL

S P G

C CL


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6

F ( )

C C. (CL) :

S : H ?

O M B T


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7

?

E:

P / E (P/E)

F / RF / EBITDA

Earnings per share$4.24

CLX$67 a share

ENR$67 a share

?

Earnings per share$2.90

$67 / $4.20 15.8x

$67 / $3.00 23.1x


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C:

8

B A: S

E

14.4x

7.8x

10.0x

7.8x

6.0x6.3x

12.8x

10.9x

8.0x

8.6x

14.2x

5.7x6.0x7.0x 6.5x

8.0x

10.0x

12.0x

13.0x 13.2x

15.0x

14.0x13.6x

12.1x

13.1x

14.0x

11.0x

10.0x

9.0x8.8x

11.1x11.1x

11.7x 12.0x

14.0x

14.7x

16.0x

8.5x

12.0x

13.5x

12.0x

8.0x7.5x

7.0x

8.8x

11.0x

10.5x

11.0x

8.0x

10.0x

11.5x

9.0x

13.0x

13.2x

14.0x

7.0x

12.0x

13.0x

10.0x

9.0x

9.0x

12.0x

11.0x

5.0x

17.0x

14.4x

15.4x

6.6x

12.0x

11.0x

9.0x

10.0x

12.0x

13.0x

14.2x14.4x

12.8x13.0x

7.2x

9.5x

14.0x

7.4x8.5x

9.2x

12.0x

11.0x 11.0x

13.0x

8.1x 8.1x

8.8x

9.5x 9.6x

10.1x

8.1x

10.0x

10.0x

7.2x

8.2x

11.0x

5x

6x

7x

8x

9x

10x

11x

12x

13x

14x

15x

16x

17x

2005

Q3

2005

Q4

2006

Q1

2006

Q2

2006

Q3

2006

Q4

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2010

Q2

/ E ( E)


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C

I ( )

H?

I /

M

C

C

(.. M C, .,)

M

L (.. D / C)

( )

Operational Filters Financial Filters

Clorox Peer Group

K KF

& G G C CL

KC KMB

C & D "CHD"

E H EN

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10

N : C

It is also important to understand WHY the market is using certain multiples

It is important to chose the RIGHT multiples

Examples: Multiples

Price/earnings

Firm value/EBITDA

P/E to growth

Price/cash flow

Generally, it is appropriate to use the multiples which are being used in the market.

Check sell-side research reports

Multiple Pros ConsFirm value/subscribers Important telecom ratio

Good for more mature situations

Assumes same profitability for all comps

Difficult to use in high growth situations

Price/book value Useful for capital intensive industries andfinancial institutions

Reflects long-term profitability outlook

Distorted by accounting differences

Need profitability cross-check

Firm value/sales Most often used with high growth

companies that do not have earnings

Need profitability cross-check

Price / click rate(?) Useful for companies without revenues orearnings (?)

Is not a good predictor of long-term returnto shareholders


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11

/ E

(E)

C ( > .. .)

( )

I

F

/ EBI

I L ( + )

D ( ?)

I D: F . E

O

C

F /

1) C CL P E P S2) C CL F EBIT

3) C CL F R

H + S = L C E

I


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12

/ E

(E)

T ( )

I

O

C

1) C CL P E ()

P > M C ( )

F: $9.5 SD

E > C () B M

E 2010E: $600

P E: $9500/$600 = 15.8

$ $


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13

F

/ EBI

O

C

1) C CL F

I L ( + )

D

I D: F . E

Liabilities and Shareholders EquityAssets

Firmvalue

Equity Value

(Common Stock)

Debt

(Net Debt)

FirmValue


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15

F

/ EBI

O

C

1) C CL F

I L ( + )

D

I D: F . E

Liabilities and Shareholders EquityAssets

Firm

value$12,443

Equity Value

$9,500m

Debt (net debt)$2,943m

FirmValue

1) C CL F EBIT

EBIT E2010E > C $1,305

F / EBIT = 9.5


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16

F /

O

C

1) C CL F R

F M?

F > $12,443

R > C

E 2010E: $5,579

F R: $12,443/ $5,579m= 2.2

H +

S = L C E

I


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C: M

17

14.4x

7.8x

10.0x

7.8x

6.0x6.3x

12.8x

10.9x

8.0x

8.6x

14.2x

5.7x6.0x7.0x

6.5x

8.0x

10.0x

12.0x

13.0x 13.2x

15.0x

14.0x13.6x

12.1x

13.1x

14.0x

11.0x

10.0x

9.0x8.8x

11.1x11.1x

11.7x 12.0x

14.0x

14.7x

16.0x

8.5x

12.0x

13.5x

12.0x

8.0x7.5x

7.0x

8.8x

11.0x

10.5x

11.0x

8.0x

10.0x

11.5x

9.0x

13.0x

13.2x

14.0x

7.0x

12.0x

13.0x

10.0x

9.0x

9.0x

12.0x

11.0x

5.0x

17.0x

14.4x

15.4x

6.6x

12.0x

11.0x

9.0x

10.0x

12.0x

13.0x

14.2x14.4x

12.8x13.0x

7.2x

9.5x

14.0x

7.4x8.5x

9.2x

12.0x

11.0x 11.0x

13.0x

8.1x 8.1x

8.8x

9.5x 9.6x

10.1x

8.1x

10.0x

10.0x

7.2x

8.2x

11.0x

5x

6x

7x

8x

9x

10x

11x

12x

13x

14x

15x

16x

17x

2005

Q3

2005

Q4

2006

Q1

2006

Q2

2006

Q3

2006

Q4

2007

Q1

2007

Q2

2007

Q3

2007

Q4

2008

Q1

2008

Q2

2008

Q3

2008

Q4

2009

Q1

2009

Q2

2009

Q3

2009

Q4

2010

Q1

2010

Q2

N CL TODA / ALE


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C

11.32x2.68x18.07xMean

9.5x2.2x15.8xClorox Corp - "CLX"

12.40x2.52x16.98xProcter & Gamble - "PG"

12.82x1.80x17.43xKraft Foods - "KFT"

10.80x3.80x17.20xEnergizer Holdings - "ENR"

9.74x3.30x21.00xKimberly-Clark - "KMB"

10.77x2.56x18.23xColgate-Palmolive - "CL"

11.36x2.10x17.55xChurch & Dwight - "CHD"

Firm Value /EBIT

Firm Value /Revenues

Price /Earnings PerShare (EPS)

Company Name

Firm Value Multiples

Equity

ValueMultiplesCompany Comp Set

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C C $67 / CL

19

$11,803$12,120$10,860E

$84.31$86.57$77.60I

140M140M140O

$2,943$2,943N D

$14,746F

$15,063F

$10,860E

($ , SD)

G M 18.1

P / E

2.7

F / R

11.3

F / EBIT

CL $600 $5,579 $1,305

B? ? H? ? ? ?

C : $77 $87


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$15.00

$9.75

$5.50

$26.75

$5.00

$4.00$5.00

$3.50

$4.94

$3.00

$4.00

$10.25

$6.00

$3.75

$0.00

$5.00

$10.00

$15.00

$20.00

Implied Price Per Share

Implied

offer =$8.50

Public trading comparables

DCF analysis

52-week

high/low

Price / Earning GrowthPrice / Earnings Price / LTM revenuePrice / SalesManagement Forecast

IncomeStreet Forecast

Income

15% Discount Rate

CIENCE , A . ECHNOLOG .

Transactioncomparables

15% Discount Rate

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E

M

F

C , ,

SEC

B (TICKERCACS) C

1: L C

C


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R

T :

B

H

R

2:

C

Televisa to Take Stake in Univision

Servicing the companys $10 billion debt loadleft Univsion reeling

Televisa is buying into the company at avaluation about 40% below its original takeover

price

Source: Wall Street Journal (10/4/2010)


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L C C

($ in Millions)

Date Target / Acquiror Transaction Value EV / LTM Revenue EV / LTM EBITDA EV / LTM EBIT

7/12/2010 Silpada / Avon $650 2.8x 10.9x 11.8x

1/14/2010 Bare Escentuals / Shiseido $1,828 3.4x 11.1x 12.3x

12/21/2009 Chattem / Sanofi Aventis $2,156 4.5x 13.1x 13.5x

12/14/2009 Simple skin care / Alberto Culver $396 3.7x 11.0x 12.0x12/11/2009 Ambi Pur (Sara Lee) / P&G $470 2.6x 12.5x 13.5x

5/11/2009 Edge (SC Johnson) / Energizer $275 1.8x 9.2x 9.8x

4/1/2008 Orajel / Church & Dwight $380 3.8x 13.6x 15.8x

1/25/2008 Frederik Fekkai / P&G $440 3.5x 16.0x 17.6x

AVERAGE $824 3.9x 11.7x 12.6x

CLX Financials $6,000 $1,500 $1,300Implied Value $23,200 $17,600 $16,380

C


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P

C N

I

E/EBIDA

EBIDA

C D?

F T

S SOTP

$51,750 * (90%) = $46,675 (I M: 8.0)

E:

Implied EV/EBITDA: 8.8x

M $1,500 7.0 $10,500

$3,900 10.0 $39,000

$450 5.0 $2,250

$5,850 $51,750


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Simpler, Leaner, Better & More

The company will finally, fully separate its cableoperations creating a near-pure contentcompany enabling better investor focus.

Source: Collins Stewart (1/30/2009)

AOL Exit Clarified

Cable networks eventually become the focus.Over the long-term, we think investors willappreciate Time Warners leading content-centric assets and streamlined strategicapproach focused on generating high-quality and

popular programming.

Source: Goldman Sachs (5/28/2009)

Cable Spin

AOL Spin


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D C F DCF


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D

,

.

T :

F

D ( ACC)

DCF A

D C F


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EBITDA

(-) Interest Expense

(-) Capital Expenditures(-) Cash Taxes

(-) Changes in Working Capital

Levered Free Cash Flow

F C F

EBITDA

(-) Capital Expenditures

(-) Cash Taxes(-) Changes in Working Capital

Unlevered Free Cash Flow

Levered Free Cash Flow Unlevered Free Cash Flow

L DCF M.

D C F


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ACC = ( * (1 T)) * (D / (D + E)) + * (E/ (D + E))

L : (1) 100% (2) 100%

D / (D + E) = 100% . E / (D + E) = 100%

T

T T

* (D / (D + E)) + * (E/ (D + E))

T

ACC = ( * (1 T)) * (D / (D + E)) + * (E/ (D + E))

C ACC

D C F


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CAPM = C A P MR + * ( )

T $10 Q

A ,

R ()

R+ ( )

10% + (1000% 10%) = 1000%

T

3% + (10% 3%) = 10%

C E CAM

D C F


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: I 50% ,

?

CAPM

B

B 1.0

B 2.0

R+ * ( )

: ACC?

C E B

D C F

Documents

UFC Valuation