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Mercury Athletic Case

This document presents financial information for Mercury Athletic from 2007 to 2011 to value the firm. It includes key metrics like consolidated operating income, capital expenditures, depreciation, changes in working capital, net operating profit after tax, free cash flow, tax rate, weighted average cost of capital, growth rate, terminal value, and total cash flow. Based on the presented financials, the value of the firm is calculated to be ₹314,613,040. The rationale for acquiring this firm would be to achieve economies of scale and utilize synergies from lean production and inventory management systems. The footwear industry benefits from this due to long design to market times, but both firms have established shorter times.

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181 views3 pages

Mercury Athletic Case

This document presents financial information for Mercury Athletic from 2007 to 2011 to value the firm. It includes key metrics like consolidated operating income, capital expenditures, depreciation, changes in working capital, net operating profit after tax, free cash flow, tax rate, weighted average cost of capital, growth rate, terminal value, and total cash flow. Based on the presented financials, the value of the firm is calculated to be ₹314,613,040. The rationale for acquiring this firm would be to achieve economies of scale and utilize synergies from lean production and inventory management systems. The footwear industry benefits from this due to long design to market times, but both firms have established shorter times.

Uploaded by

krishnakumar r
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Presented by

Jaseel.K.P Joseph Manavalan


Minu Joy V Krishna Kumar
Valuation of Mercury Athletic
Description 2007 2008 2009 2010 2011
Consolidated Operating Income 47,005.0 53,036.0 57,605.0 61,686.0 64,612.0
Estimated Capital Expenditures 11,983.00 12,226.00 13,303.00 14,258.00 14,943.00
Estimated Depreciation 9,587.00 9,781.00 10,643.00 11,406.00 11,954.00
Change in WC 4,567 2,649 9,805 8,687 6,233
EBIT*(1-T)=NOPAT 28,203.00 31,821.60 34,563.00 37,011.60 38,767.20
Free Cashflow 21,240.05 26,727.46 22,098.16 25,472.21 29,544.87
Tax Rate 40% 40% 40% 40% 40%
WACC 11.06% 11.06% 11.06% 11.06% 11.06%
Growth Rate 3% 3% 3% 3% 3%
Terminal Value 3,77,558.48
Total Cashflow 21,240.05 26,727.46 22,098.16 25,472.21 4,07,103.35
Value of Firm ₹ 3,14,613.04
 What should be rationale of this acquisition? How is the impact of the industry
structure on rationale of acquisition?
 Rationale of this acquisition is to achieve economies of scale and utilize the synergy
of having lean production system and lean inventory management
 Footwear industry is having long gestation period and longer period to offer new
designs. However both these firms had established mechanisms to offer shorter
time from design to market. Moreover supplier consolidation necessitated
requirement to have larger volumes to get better prices.

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