On August 8, 2016 Vail Resorts, Inc. (NYSE: MTN) announced an offer to purchase all of the equity of Whistler Blackcomb Holdings, Inc. (TSX: WB). Under the transaction, Vail Resorts offered Whistler Blackcomb shareholders C$17.50 per share in cash and 0.0975 shares of Vail Resorts common stock, for consideration having a total value of C$36.00 per share (or C$1.4 billion in total). Vail Resorts Inc., which owns eleven ski destinations across the U.S. (and one in Australia), agreed to buy Canada's Whistler Blackcomb Holdings Inc., operator of North America's biggest and busiest ski resort. Based on the assumptions below and the attached financial statements estimate the fair value of WB stock price and compare it with the offer made by MTN. . . . All cash flows occur at fiscal year-end, so the 2017 cash flows will occur in one year. WACC is 5.9786% Sales growth rates are given in the spreadsheet. Use 2020 growth rate as terminal growth rate. The ratio gCAPEX/Asales= 0.46. The average depreciation will be constant at the 2016 value. Assume that the following accounts remain fixed througtut the forecast: Amortization, Goodwill and Intangible Assets, Other Assets, Other liabilities, Common Stock and Non-Controlling Interest. Long-term debt is the plug account. No dividends are paid. Percent of sales forecasts should be based on 2016 ratios to sales. Ignore redundant assets (ie., cash). Remember that Amortization is not a Free Cash flow account . . . ratios 2015 2016 2017 015 2018 0.0250 2019 00250 2020 0.025 1 ASSUMPTIONS 2 Sales Growth 3 Change in Sales 4 Depreciation Rate S MCAPEX 6 x 7 CAPEX & CAPEX TOTAL 9 WACC 20 0.075 23,787 0.075 22,003 0.075 20,353 ME 0.075 0.075 25,716 046002.881052632 143,55784 764,257 CA 59760X EX Forecast 2017 09 30 265,270 140,754 30,064 23,787 2018-09-30 271.902 144,223 30,815 22,003 2019-09-30 278,699 147,180 31,586 20.253 2020-09-30 285,667 151.577 rule of 32,375 18826 2015-09-30 262,254 140,122 30,094 29,659 12.509 49,870 20,516 29,314 3,040 21,285 38,042 2016-09-30 312.082 165,593 35,169 25,716 12.500 72,895 12, 162 60,533 15,213 44,820 18.255 7,234 4,250 21.161 7415 4,356 21,690 7.600 4,465 22,232 7.790 4,577 22.78 12 Whistler Backcomb Holdings Inc. Financial Statements 13 24 soos 15 Revenues 16 Operating Expenses 17 SG&A 18 Depreciation 19 Amortization 20 EBIT 21 interest 22 Income Before Tax 23 Income Tax 24 Net Income 25 shares outstanding 26 27 Cash 28 Accounts Receivable 29 Inventory 30 Other Current Assets 31 Total Current Assets 32 PRE 33 Other Acets 34 Goodwill & Intangibles 35 Total Assets 36 37 Accounts Payable 38 Other Current liabilities 39 Total Current abilities 40 Total Debt 41 Other Uabilities 42 Total Liabilities 43 Common Stock 44 Retained Earnings 45 Whistler Blackcomb Shareholder Equity 46 Non-Controlling Interest 47 Total Equity 48 Total abilities & Shareholders' Equity 49 5.622 3,783 22.500 4.578 36,633 315 312 9.861 432,352 294,165 3,510 5,000 24,895 5,259 43,664 317,162 9,995 430555 B01,376 293,375 271,372 251.019 232,192 27,980 31.237 59,717 28.680 32,531 61,210 29,397 33,344 62,741 30,132 34172 64,300 28,793 29,675 58,468 305.232 29,780 393,480 444,775 190.666) 354,100 46,576 400,685 794,165 32,918 27,338 70,256 257,465 30,285 358,005 444,881 145,846) 399,035 44,335 443,370 801,376 On August 8, 2016 Vail Resorts, Inc. (NYSE: MTN) announced an offer to purchase all of the equity of Whistler Blackcomb Holdings, Inc. (TSX: WB). Under the transaction, Vail Resorts offered Whistler Blackcomb shareholders C$17.50 per share in cash and 0.0975 shares of Vail Resorts common stock, for consideration having a total value of C$36.00 per share (or C$1.4 billion in total). Vail Resorts Inc., which owns eleven ski destinations across the U.S. (and one in Australia), agreed to buy Canada's Whistler Blackcomb Holdings Inc., operator of North America's biggest and busiest ski resort. Based on the assumptions below and the attached financial statements estimate the fair value of WB stock price and compare it with the offer made by MTN. . . . All cash flows occur at fiscal year-end, so the 2017 cash flows will occur in one year. WACC is 5.9786% Sales growth rates are given in the spreadsheet. Use 2020 growth rate as terminal growth rate. The ratio gCAPEX/Asales= 0.46. The average depreciation will be constant at the 2016 value. Assume that the following accounts remain fixed througtut the forecast: Amortization, Goodwill and Intangible Assets, Other Assets, Other liabilities, Common Stock and Non-Controlling Interest. Long-term debt is the plug account. No dividends are paid. Percent of sales forecasts should be based on 2016 ratios to sales. Ignore redundant assets (ie., cash). Remember that Amortization is not a Free Cash flow account . . . ratios 2015 2016 2017 015 2018 0.0250 2019 00250 2020 0.025 1 ASSUMPTIONS 2 Sales Growth 3 Change in Sales 4 Depreciation Rate S MCAPEX 6 x 7 CAPEX & CAPEX TOTAL 9 WACC 20 0.075 23,787 0.075 22,003 0.075 20,353 ME 0.075 0.075 25,716 046002.881052632 143,55784 764,257 CA 59760X EX Forecast 2017 09 30 265,270 140,754 30,064 23,787 2018-09-30 271.902 144,223 30,815 22,003 2019-09-30 278,699 147,180 31,586 20.253 2020-09-30 285,667 151.577 rule of 32,375 18826 2015-09-30 262,254 140,122 30,094 29,659 12.509 49,870 20,516 29,314 3,040 21,285 38,042 2016-09-30 312.082 165,593 35,169 25,716 12.500 72,895 12, 162 60,533 15,213 44,820 18.255 7,234 4,250 21.161 7415 4,356 21,690 7.600 4,465 22,232 7.790 4,577 22.78 12 Whistler Backcomb Holdings Inc. Financial Statements 13 24 soos 15 Revenues 16 Operating Expenses 17 SG&A 18 Depreciation 19 Amortization 20 EBIT 21 interest 22 Income Before Tax 23 Income Tax 24 Net Income 25 shares outstanding 26 27 Cash 28 Accounts Receivable 29 Inventory 30 Other Current Assets 31 Total Current Assets 32 PRE 33 Other Acets 34 Goodwill & Intangibles 35 Total Assets 36 37 Accounts Payable 38 Other Current liabilities 39 Total Current abilities 40 Total Debt 41 Other Uabilities 42 Total Liabilities 43 Common Stock 44 Retained Earnings 45 Whistler Blackcomb Shareholder Equity 46 Non-Controlling Interest 47 Total Equity 48 Total abilities & Shareholders' Equity 49 5.622 3,783 22.500 4.578 36,633 315 312 9.861 432,352 294,165 3,510 5,000 24,895 5,259 43,664 317,162 9,995 430555 B01,376 293,375 271,372 251.019 232,192 27,980 31.237 59,717 28.680 32,531 61,210 29,397 33,344 62,741 30,132 34172 64,300 28,793 29,675 58,468 305.232 29,780 393,480 444,775 190.666) 354,100 46,576 400,685 794,165 32,918 27,338 70,256 257,465 30,285 358,005 444,881 145,846) 399,035 44,335 443,370 801,376