Submitted by: Submitted by 7777777
Views: 236
Words: 715
Pages: 3
Category: Business and Industry
Date Submitted: 04/02/2013 05:33 PM
Birdie Golf, Inc. has been in merger talks with Hybrid Golf Company for thepast six months. After several rounds of negotiations, the offer underdiscussion is a cash offer of $440 million for Hybrid Golf. Both companies haveniche markets in the golf club industry, and the companies believe a mergerwill result in significant savings in general and administrative expenses.
Bryce Bichon, the financial officer for Birdie, has been instrumental in the mergernegotiations. Bryce has prepared the following pro forma financial statementsfor Hybrid Golf assuming the merging takes place. The financial statementsinclude all synergistic benefits from the merger:
2010
2011
2012
2013
2014
Sales
$640,000,000
$720,000,000
$800,000,000
$900,000,000
$1,000,000,000
Production Cost
$449,000,000
$504,000,000
$560,000,000
$632,000,000
$705,000,000
Depreciation
$60,000,000
$64,000,000
$66,000,000
$66,000,000
$67,000,000
Other Expenses
$64,000,000
$72,000,000
$80,000,000
$90,000,000
$97,000,000
EBIT
$67,000,000
$80,000,000
$94,000,000
$112,000,000
$131,000,000
Interest
$15,200,000
$17,600,000
$19,200,000
$20,000,000
$21,600,000
Taxable Income
$51,800,000
$62,400,000
$74,800,000
$92,000,000
$109,400,000
Taxes (40%)
$20,720,000
$24,960,000
$29,920,000
$36,800,000
$43,760,000
Net Income
$31,080,000
$37,440,000
$44,880,000
$55,200,000
$65,640,000
Bryce is also aware that the Hybrid Golf Division will require investments eachyear for continuing operations, along with sources of financing. The followingtable outlines the required investments and sources of financing.
2010 2011 2012 2013 2014...