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Should AGI Acquire Mercury Athletic Footwear?
Transcript of Should AGI Acquire Mercury Athletic Footwear?
$470.3 Million Sales Revenue in 2006
42% Revenue - Athletic Footwear
58% Revenue - Casual Footwear
Among the best profit margins in the Industry
Prosperous, Active, and Fashion-Conscious Brand Image.
Mercury Athletic Footwear
$431.1 Million Sales Revenue in 2006
Appeals to Youth Market (15-25).
Active lifestyle and Extreme Sport Brand Image
Faltering Women's Casual Footwear Segment
AGI Inc. Should Acquire Mercury Athletic Footwear.
Revenues will Roughly Double
Relieve Pressure from Manufacturers to Boost Capacity Utilization
Profitable Advantage in Merging Men's Footwear Segments.
Terminal Multiple 5.7x
Terminal Growth Rate: 3.3%
After Tax Cost of Debt: 3.6%
Cost of Equity: 11.76%
Tangible Assets - Total Liabilities = Net Assets
LBO Valuation Approach
EBITDA Multiple: 6x based on comparable and 6 turns.
2006 EBITDA: $51,804
EBITDA Multiple: 6x
Enterprise Value: $310,827
Net Assets: $127,136
Final Value: $316,697
EBITDA: 5.9 x $51,805 = EV: $307,373