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Merger Assumptions for Online Company Inc & Brick 'n' Mortar Co
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Assumptions
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Transaction Inputs
 Scenarios
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 Acquirer Name
Online Company Inc
 Scenario # LIVE --> 4 1 2 3 4 5
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 Target Name
Brick 'n' Mortar Co
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Acquirer Share Price
$11.75 Synergies
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Target Share Price
$17.30
Revenue enhancement
 6,500 5,500 6,000 6,000 6,500 6,500
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Transaction Close Date
30/9/2017 COGS savings 875 875 875 875 875 875
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Financial Reporting Units
 $ 000s
Marketing savings
 1,250 1,250 1,250 1,250 1,250 1,250
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 Currency USD
General & Admin savings
 1,000 1,000 1,000 1,000 1,000 1,000
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Restructuring Charges
 2,000
Synergies in Year 1 (full yr.)
30%30%30%30%30%30%
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Equity Issuance Fees
3.0%
Synergies in Year 2
65%65%65%65%65%65%
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Debt Issuance Fees
3.0%
Synergies in Years 3+
100%100%100%100%100%100%
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Other Closing Costs
 2,000
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 Financing
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Replace Target Debt
 Yes Debt Tranche
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Replace Acquirer Debt
 No Senior Debt A 100,000 - 100,000 100,000 100,000 100,000
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 Senior Debt B 50,000 - - 50,000 50,000 50,000
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Acquirer FD Shares Outstanding
 50,000
Subordinated Debt
 25,000 - - - 25,000 25,000
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Target FD Share Outstanding
 25,000 Interest Rate
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 Shares Issued 23,238 Senior Debt A5.50%5.50%5.50%5.50%5.50%5.50%
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Pro Forma Shares Outstanding
 73,238 Senior Debt B5.75%5.75%5.75%5.75%5.75%5.75%
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Subordinated Debt
8.25%8.25%8.25%8.25%8.25%8.25%
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Share Issuance Discount
1.0%
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Share Issuance Price
$11.63
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 Transaction
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Takeover Premium
25.0%15.0%15.0%20.0%25.0%30.0%
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Purchase Price
Cash Consideration
50.0%0.0%20.0%40.0%50.0%55.0%
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Target Share Price
$17.30
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Takeover Premium
25.0%
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 Offer Price$21.63
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Sources & Uses of Cash
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Acquirer Share Price
$11.75
Sources of Cash
 Uses of Cash
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Share Exchange Ratio
 1.840 Cash 127,473
Cash Consideration
 270,313
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 Stock Issued 270,313
Stock Consideration
 270,313
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Target Shares Outstanding
 25,000 Debt Issued 175,000
Target Debt - Replace
 16,801
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 Offer Price$21.63
Acquirer Debt - Replace
 -
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Purchase Price
 540,625
Debt Financing Fees
 5,250
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 Target Debt 16,801
Equity Financing Fees
 8,109
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 Target Cash 72,624
Other Closing Costs
 2,000
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Enterprise Value
 484,802 Total Sources 572,785 Total Uses 572,785
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Goodwill and Purchase Price Allocation
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Fair Market Value
 Book Value Fair Value Adjustment
Purchase Price Allocation
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Inventory & Other Current Assets
 86,896 168,354 81,458
Total Purchase Price
 540,625
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 Target PP&E 22,174 95,854 73,680
Net Book Value of Assets
 87,899
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Identifiable Intangibles
 -
Excess Purchase Price
 452,726
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Net Identifiable Assets
 109,070 264,208 155,138
Write-off Existing Goodwill
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Fair Value Adjustments
 155,138
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Excess Purchase Price After Adjustments
 297,588
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 Goodwill 297,588
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Closing Balance Sheet
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Pro Forma Consolidated Balance Sheet
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 Step # 1 2 3 4 5 6 7 8 9 10
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 Acquirer Target Fair Value Target PF Purchase Financing Financing Financing Total Adj. Consol
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30/9/201730/9/2017 Transaction Debt + Equity Fess Re-fi Debt30/9/2017
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 Assets
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 Cash 162,578 72,624 72,624 (270,313) 175,000 (15,359) (16,801) (54,849) 107,729
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Accounts Receivable
 7,829 5,869 5,869 5,869 13,697
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 Inventory 11,747 8,403 81,458 89,861 89,861 101,608
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Current Assets
 182,153 86,896 40,881 223,034
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Property & Equipment
 43,143 22,174 73,680 95,854 95,854 138,997
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 Goodwill - 297,588 297,588 297,588
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 Total Assets 225,296 109,070 434,323 659,619
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 Liabilities
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Short Term Debt
 - - - -
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Accounts Payable
 5,954 4,370 4,370 4,370 10,324
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Current Liabilities
 5,954 4,370 4,370 10,324
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Long Term Debt
 30,000 16,801 16,801 175,000 (16,801) 175,000 205,000
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Total Liabilities
 35,954 21,171 179,370 215,324
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Shareholder's Equity
82
 Equity Capital 70,000 39,203 39,203 (39,203) 270,313 270,313 340,313
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Retained Earnings
 119,342 48,697 48,697 (48,697) (15,359) (15,359) 103,983
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Shareholder's Equity
 189,342 87,899 254,953 444,295
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Total Liabilities & Shareholder's Equity
 225,296 109,070 434,323 659,619
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 Check0.0000.0000.0000.000
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Accretion/Dilution Analysis
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20182019202020212022
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Earnings Per Share
95
Acquirer Net Earnings
 40,030 43,316 44,663 47,239 48,699
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Target Net Earnings
 23,910 28,510 32,118 35,303 38,428
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Pro Forma Net Earnings
 50,397 63,302 74,308 82,705 88,182
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Acquirer Shares O/S
 50,000 50,000 50,000 50,000 50,000
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Target Share O/S
 25,000 25,000 25,000 25,000 25,000