1. Who is the Maple Group (Maple), and why is it making an offer for TMX? Why do the banks behind Maple need to include other partners in their bid?
2. What would be the implied price per share if TMX’s market multiples were similar to the other integrated cash-equities and derivatives exchanges?
3. How will the leveraged recapitalization affect TMX’s EPS? Calculate the pro forma impact on 2010 EPS if the TMX is recapitalized to 3.0x Net Debt/EBITDA. Use adjusted 2010 EBITDA of $371m, a cost of debt of 5%, and a share repurchase price of $45 per share. Ignore any transaction costs from the merger or its financing
4. What share price would you recommend bidding for TMX? Justify your choice.
must not exceed 10 pages (excluding title page), double-spaced, including all graphs, tables and references, etc. Please use 12 points Time New Roman font only.
Expectations: o Learn about the business and industry Firm’s management, operations, financial performance, major and minor issues faced, competitive position etc.
Industry’s characteristics, key success factors, economic conditions, competitiveness, etc.
o Estimate stand alone and synergy value of the target firm using multiple valuation methods (at-least two) such as discounted cash flow, comparables approach, accounting method (BV of equity plus adjustments), P/E multiples, dividend discount model, etc. Include sensitivity analysis as well.
o Suggest alternate methods of financing the acquisition.
o Discuss the effect of ownership structure on market for corporate control.
o Provide conclusions and recommendations (such as, the offer price).
