Adecco SA's Acquisition of Olsten Corp.

Using Exhibit 13, what is your estimate of the total enterprise valueof the staffing business of Olsten? (40 points)

For this calculation, assume the following:

• You are evaluating the acquisition from the perspective of Adecco US.
• The acquisition would be completed as of January 1, 2000.
• The long-term capital structure of the business would be 20% debt and 80% equity.
• The estimated EBIAT was arrived at without deducting amortization of goodwill.
• Olsten's US rivals (i.e. Kelly and Manpower) have a debt beta of 0.10. Also, assume that Olsten's staffing business will have the same beta of debt at its target capital structure.
• Market risk premium =7.2%