1. A supermarket chain (Foodco) trades publicly at 6x EV/EBITDA, like most other such chains. EV= market value of net debt + equity.

Few investors know of Foodcos Internet payment subsidiary, which operates independently of the supermarkets. The payment business (FinPay) now represents 15% of Foodcos total EBITDA. Similar publicly-traded Internet payment firms are priced at 12x EV/EBITDA.

Assume Foodco obtains IRS and SEC approval to spin-off FinPay shares to Foodco shareholders on a tax-free, one share for one share basis. How much extra value might be created? Please complete the table below.

Present Situation

Foodco
Foodco Share Price	$ 10 per share
EBITDA	100 million
Enterprise Value	600 million
Debt	-0-
Excess Cash	-0-
Shares Outstanding	60 million

Pro Forma after Spin off
Foodco Share Price	$10 per share
Foodco EBITDA	100
EV	?
Debt	-0-
Cash	-0-
Foodco Shares Outstanding	60 million
FinPay Share Price	? per share
EBITDA	?
EV	?
Debt	-0-
Cash	-0-
FinPay Shares Outstanding	60 million