The Value of Comcast before the Acquisition:
We use the DCF (Discounted Cash Flow) analysis to estimate the value of Comcast before the acquisition.
First, we want to calculate the expected future free cash flows available (Appendix 1) after making necessary expenditures for the firm to continue as a going concern. In order to get the projected financial statements, we made following assumptions:
* Growth rate: We believe Comcast has entered the mature stage of the business lifecycle. So its growth rate should be relatively stable and not higher than the general GDP growth rate. We assume its revenue will grow at 1% from 2011 to 2015 and then decrease to 0 ...view middle of the document...
Terminal Value = UFCF2015 (1+g)/(WACC- g) = $127,948 million
Finally, we could discount all the UFCFs and the Terminal Value back to estimate the value of Comcast before the acquisition.
Vcomcast = UFCF2011/(1+WACC) + UFCF2012/(1+WACC)2 + UFCF2013/(1+WACC)3
+UFCF2014/(1+WACC)4 + (UFCF2015 + Terminal Value)/(1+WACC)5
= $117,483 million
The Value of NBC before the Acquisition:
Since NBC are used to be a segment of GE, we could not find enough public data to calculate the value of NBC using DCF approach. Therefore, we collected some professional research report and studied their analysis. Based on the article written by WSJ analysts, Comcast and GE are valuing NBC between $28 billion-$30 billion. In our analysis, we assume the value of NBC is $30 billion.
The Value of Comcast after the Acquisition:
Because the deal was completed early this year, the formal financial statements like 10-K or 10-Q are not available yet. We could not find enough public data to conduct a DCF analysis of Comcast after the acquisition by ourselves. Similarly, we studied some professional reports and used expected free cash flows from 2011 to 2015 they predicted. And based on those data, we did the DCF analysis of Comcast after the acquisition just like the way we did for it before the acquisition. And we get the value of Comcast after acquisition equals to 156,692 million. (Appendix 2)
The Synergy Created by the...