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17) The implied enterprise value of Snap Inc
17) The implied enterprise value of Snap Inc., calculated using the assumptions and acquisitior premium provided, is: $30,498 $92,661 $91,669 $92,165 Acquisition of Snap by Amazon 20% 5% Acquisition Structure Assumptions Acquisition Premium Equity Issuance Discount (to Current Price) % Debt Financing % Equity Financing 20% 80% Acquirer and Target Assumptions Share Price ($/sh.) Fully Diluted Shares Outstanding (MM) Net Debt FY+ 1 Normalized Net Earnings FY+ 1 Normalized Cash Flow Amazon Acquirer $3,099.40 518 $66,884 $23,688 $69,825 Snap Target $44.29 1,734 -$496 -$581 $334 Pro Forma Adjustment FY+ 1 Normalized Net Earnings FY+ 1 Normalized Cash Flow Pro-Forma Net Debt $3,134 $642 $85,595
Expert Solution
Hence, the correct answer is the third option showing 91,669.
Data for Snap Inc.
Share Price, P = 44.29
Premium on acquisition, p = 20%
Hence, effective share price for acquisition, P* = P x (1 + p) = 44.29 x (1 + 20%) = $ 53.15
Number of shares outstanding, N = 1,734 MM
Equity value, E = P* x N = 53.15 x 1,734 = $ 92,158.63 MM
Net Debt, D = - 496
Hence, the implied enterprise value = Equity value + net debt = E + D = 92,158.63 + (- 496) = 92,158.63 - 496 = $ 91,662.63 MM
The nearest answer is the third option showing 91,669. Hence, the correct answer is the third option showing 91,669.
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