If a company is a very large listed Australian based commodities trading company, which has slowed in growth prospects. the company has never paid any dividends and has abundant cash equivalents of $4 billion and excellent debt capacity to fund growth opportunities. Jaffa has a beta of 1.00, earnings per share of $3.00 on 1 billion shares outstanding and a debt/equity ratio of 1?4. its current cost of debt is 7.00% per annum, has a corporate tax rate of 30% and an enterprise market value of $30 billion dollars.if the company consider takeover activities. these two target firm valuation provided in the excel, can you give some recommendation, takeover both companies or which one of them?

Dsicounted Cash Flow A ($ in millions) EBIT Subtract. Tax & Abnormals Unlevered Net Income Add. Depreciation Add. Amortization Subtract. NWC Subtract. CAPEX FCFF Industry Growth Rate WACC Sustainable Growth Rate NPV at 06/2015 Subtract. Long-term Debt Add. Cash Value of Equity GMG 06/2015 06/2016 06/2017 06/2018 $ 877.30 $ 0.75 $ 876.55 $ 6.60 $ $ 127.00 $ 3.80 $ 752.35 $ 814.80 $ 882.42 $ 955.66 Grow at 8.30% industry gr 8.30% 9.985% Sensitivity Analysis 3.60% Industry Growth Rate $ 17,378.71 Share Price $ 2,707.90 $ 746.50 $ 15,417.31 Share Outstanding (in million) Price $ ($ in millions) EBIT Subtract. Tax & Abnormals Unlevered Net Income Add. Depreciation Add. Amortization Subtract. NWC Subtract. CAPEX FCFF Industry Growth Rate WACC Sustainable Growth Rate NPV at 06/2015 Subtract. Long-term Debt Add. Cash 1770.1 8.71 GMG Adjusted Price at 26/01/2016 SHL 06/2015 06/2016 06/2017 06/2018 $ 517.93 $ 124.92 $ 393.01 $ 135.97 $ 43.23 $ 73.32 $ 264.17 $ 234.72 $ 245.05 $ 255.83 $ 267.09 Grow at 4.40% industry gr 4.40% 4.943% Sensitivity Analysis 2.05% Industry Growth Rate $ 10,142.56 Share Price $ 2,223.99 $ 249.39 Value of Equity $ 8,167.96 Share Outstanding (in million) Price $ 413.4 19.76 SHL Adjusted Price at 26/01/2016 Dsicounted Cash Flow Analysis GMG 06/2019 06/2020 06/2021 06/2022 06/2023 06/2024 06/2025 Terminal $1,034.98 $1,120.89 $1,213.92 $1,314.68 $1,423.80 $1,541.97 $1,669.95 $ 27,095.89 Grow at 8.30% industry growth rate for 10 consecutive years Sensitivity Analysis Recession Normal Boom 5.30% 8.30% 11.30% $ 6.73 $ 8.71 $ 11.20 Adjusted Price at 26/01/2016 SHL 06/2019 06/2020 $ 5.77 06/2021 06/2022 06/2023 06/2024 06/2025 Terminal $ 278.84 $ 291.11 $ 303.92 $ 317.29 $ 331.25 $ 345.82 $ 361.04 $ 12,735.61 Grow at 4.40% industry growth rate for 10 consecutive years Sensitivity Analysis Recession Normal Boom 2.00% 4.40% 6.80% $ 15.17 $ 19.76 $ 25.35 Adjusted Price at 26/01/2016 $ 17.07 Relative Approach GMG Earning per Share (06/2015) P/E Ratio (industry average) Price (P/E Analysis) $ EBIT (06/2015) ($ in millions) EV/EBIT (industry average) Price (EV/EBIT) $ $ $ 0.36 15.828 5.75 877.30 15.975 6.24 SHL Earning per Share (06/2015) P/E Ratio (industry average) Price (P/E Analysis) $ EBIT (06/2015) ($ in millions) EV/EBIT (industry average) Price (EV/EBIT) $ $ $ 0.87 28.18 24.52 517.93 20.45 18.47 Present Value of Growth Opportunity GMG Earning per Share (06/2015) Cost of Equity Expected Share Price (06/2015) PVGO per share Present Value of Growth Opportunity ($ in millions) $ 0.363 12.274% $ 8.71 $ 5.75 $ 10,180.85 of Growth Opportunity SHL Earning per Share (06/2015) Cost of Equity Expected Share Price (06/2015) PVGO per share Present Value of Growth Opportunity ($ in millions) $ 0.87 5.870% $ 19.76 $ 5.00 $ 2,068.37 ($ in millions) GMG Adjusted Price at 26/01/2016 Share Outstanding (in million) Minimum Purchasing Amount $ Expected Market Value Equity (DCF Analysis $ Expected Value Added $ SHL Adjusted Price at 26/01/2016 Share Outstanding (in million) Minimum Purchasing Amount $ Expected Market Value Equity (DCF Analysis $ Expected Value Added $ Cash $ Total Costs $ Total Expected Value Added $ $ 5.77 1770.1 10,213.48 15,417.31 5,203.83 $ 17.07 413.4 7,056.74 8,167.96 1,111.22 4,000.00 17,270.22 6,315.06 100% cash consideration accrete EPS, need to borrowat least $13 billion. (is it possible?) cash and stock consideration may accrete or dilute EPS, need to borrow money as well depends on the proportion. 100 stock consideration dilute EPS, less affect on liquidity risk and cost of debt, but ownership for each shareholder is diluted. Opportunity cost of cash is the 2.7% riskfree rate or other investment. Cost of debt will rise as you borrow more. Fees that pay to investment bank if you decide to merge Good investments, since the investments provide postive NPVs. The point is, do we have ability to accept the project with that $4 billion cash. _(: )_ There are cost synergies, asset synergies and revenue synergies. So, merge or not, up to you now