Base on given information in the EXHIBIT 10, how can we use given data(EBITDA saving, restructuring cost and risk factors) to calculate the incremental EBIT, FCF, and use DCF model to make separate valuation?

Page 20 ( incremental ) 9BOON020 "with given information, how to estimate the EBIT and FCF, and use DCF method to make a separate Exhibit 10 FCF valuation of the synergies . (other components could be ignored in FCF formula) ySUMMARY OF POTENTIAL SYNERGIES Potential Acquirer EBITDA Savings (Cdn$ in millions) One-time Comp- Implement- estructuring etition ation Corporate Admin- Country Terminals Ware- Risk Risk house Total costs istration Elevators Factor Factor Alberta Wheat Pool and 11 15 16 5 56 31 50% 50% Manitoba Pool Elevators Saskatchewan Wheat Pool 11 15 46 20 35% 35% Pioneer Hi-Bred Int'l Inc. 11 14 34 18 15% 35% Notes: EBIT = EBITDA-Rep. /Amortization Full EBITDA savings are assumed to be achieved by 2000. In 1998 only one-third of the savings will be realized, and in 1999 only two-thirds of the savings will be realized. After 2000, savings should row with inflation, which is expected to grow at two per cent per year in perpetuity. Administration refers to costs associated with the running of operations including elevators, terminals and warehouse. Corporate refers to head office expenses. One time restructuring costs will be spread equally over 1998 and 1999. These costs include severance costs of one year payroll due to layoffs and $3 million for systems upgrades. EBITDA and one-time costs are fully taxable. Competition risk factor is the probability that competition will eliminate the net synergy gains from the acquisition. Implementation risk factor is the probability that net synergy gains from the acquisition would be eliminated due to problems in implementation. Source: Scotia Capital Markets This document is authorized for use only in Russell Poskitt's FINA5525 SEM 2 2019 at University of Western Australia from Jul 2019 to Jan 2020