Instructions on the event study on acquisition assignment (Graduate Students Only) 20 points On June 10, 2019, Salesforce announced to purchase Tableau Software in a deal worth $15 7 billion The purchase price normally includes the price for the acquired assets and the price for total present value of assumed future cash inflows the company can generate additionally by acquiring the target The US cloud software giant said the acquisition will be made through an all stock transaction (10 points) Upload the data crmdata2 sas7bdat Calculate the cumulated excess returns of Salesforce and Tableau from June 7 till June 11, respectively Calculate the impact on market value of each company using the cumulated excess returns (Note number of shares outstanding is in thousands) Briefly comment on what you find Hint For example, if the cumulated excess return for Salesforce is 1 , what is the corresponding increase in market value for Salesforce (10 points) Salesforce claimed that the acquisition would bolster the enterprise firm's revenue by $350 to $400 million in 2020 On June 7 th , Tableaus market value of equity is approximately 9 5 billion Assume the increase in the annual revenue is permanent Based on Tableaus accounting data and the expectation on the additional revenues, does Salesforce has a good deal in acquiring Tableau Is your evaluation consistent with the market reaction to the acquisition announcement Hint You may follow the following steps to evaluate the deal 1 use acctg data to find the total assets and total liabilities of Tableau at the end of 2018 Note assets and liabilities are measured in millions in acctg 2 Compare Tableaus market value of total assets (market value of equity total liabilities) The market value of total assets indicates how much investors think Tableau is worth What is the difference between Tableaus market value and book value What is the premium Salesforce paid (purchase price market value of Tableau) 3 Calculate the net present value of the future revenues You can make some assumptions, about the number of years that Salesforce can generate these additional revenues and the cost of capital 4 Combine the book value of assets of Tableau and the net present value of future cash flows Has Salesforce over or underpaid for the value If so, by how much

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Instructions on the event study on acquisition assignment (Graduate Students Only) 20 points. On June 10, 2019, Salesforce announced to purchase Tableau Software in a

Instructions on the event study on acquisition assignment (Graduate Students Only) 20 points.

On June 10, 2019, Salesforce announced to purchase Tableau Software in a deal worth $15.7 billion. The purchase price normally includes the price for the acquired assets and the price for total present value of assumed future cash inflows the company can generate additionally by acquiring the target. The US cloud software giant said the acquisition will be made through an all-stock transaction.

(10 points) Upload the data crmdata2.sas7bdat. Calculate the cumulated excess returns of Salesforce and Tableau from June 7 till June 11, respectively. Calculate the impact on market value of each company using the cumulated excess returns (Note: number of shares outstanding is in thousands). Briefly comment on what you find.

Hint: For example, if the cumulated excess return for Salesforce is 1%, what is the corresponding increase in market value for Salesforce?

(10 points) Salesforce claimed that the acquisition would bolster the enterprise firm's revenue by $350 to $400 million in 2020. On June 7^th, Tableaus market value of equity is approximately 9.5 billion. Assume the increase in the annual revenue is permanent. Based on Tableaus accounting data and the expectation on the additional revenues, does Salesforce has a good deal in acquiring Tableau? Is your evaluation consistent with the market reaction to the acquisition announcement?

Hint: You may follow the following steps to evaluate the deal.

1. use acctg data to find the total assets and total liabilities of Tableau at the end of 2018. Note assets and liabilities are measured in millions in acctg.

2. Compare Tableaus market value of total assets (market value of equity + total liabilities). The market value of total assets indicates how much investors think Tableau is worth. What is the difference between Tableaus market value and book value? What is the premium Salesforce paid (purchase price-market value of Tableau)?

3. Calculate the net present value of the future revenues. You can make some assumptions, about the number of years that Salesforce can generate these additional revenues and the cost of capital.

4. Combine the book value of assets of Tableau and the net present value of future cash flows. Has Salesforce over or underpaid for the value? If so, by how much?