Overview: For this assignment, you will read the Electrolux and GE Appliances case study, which offers an analysis of the Electrolux's valuation process during its acquisition of GE Appliances in August of 2014. The Electrolux team was tasked with completing a valuation and crafting a final offer for the GE appliance division. In your short paper, you will describe the circumstances of the deal for these two companies, conduct basic valuation calculations, and make a recommendation that would be communicated to senior management.

Prompt: Specifically, the following critical elements must be addressed:

I. Provide a detailed overview of the scenario, including the parties involved, the history, and the specifics of the deal. II. Calculate the total value of GE Appliances and Electrolux.

Hint: We are looking for the total value from Electrolux's point of view. Look at PV values in exhibits 7 through 9:Total Value = GE Appliances + Mabe Interest + Synergies

III. Using the projected seven-year valuation, calculate the range of values for GE Appliances.IV. Do the terminal values support the merger? Looking at the numbers in the exhibit, do you think the merger should happen? Is it a good investment? Support your answer with a full explanation of why (or why not), with supporting financial information.

Hint: There will be three calculations: a preliminary calculation based on the case study, an expanded year valuation from four to seven years, and an expanded calculation from four to seven years including NWC.

Summary of Exhibit 7 Valuation of GE Appliances

Revenue Growth

In Case

No TVNo Capex No NWC

No TVNo Capex NWC

Terminal Value Capex NWC

4 Years 7 Years 7 Years 7 Years -1.00% $457 -$80 -$12 -$3,863 0.00% $718 $524 $563 -$2,102 1.00% $984 $984 $1,158 -$249 2.00% $1,254 $1,800 $1,776 $1,700 3.00% $1,531 $2,475 $2,416 $3,752 4.00% $1,812 $3,175 $3,079 $5,909

Summary of Exhibit 8 Valuation of GE Interest in Mabe Revenue Growth In Case No Terminal Values Terminal Values7 Years 7 Years1.00% $60 -$28 -$3942.00% $128 $135 $1143.00% $198 $304 $6483.80% $254 $445 $1,0964.00% $268 $480 $1,211Extension of Exhibit 9 Value of SynergiesRevenue Growth In Case No Terminal Values Terminal Values0.00% $509 $1,019 $2,558IV. In reference to the tables above, if you were presenting to senior management and had to give one number for each final valuation, what would those numbers be, and how would you arrive at the numbers? Explain your answers.

Hint: Think of final valuation as the conservative number. For GE, you should look at 7-year TV, Capex, and NWC. For Mabe, use No TV and slightly higher revenue growth, and for synergies, use the case numbers.

V. In the end, did the merger go through or not? Research the outcome and explain what happened.

FIN 630 Module Eight Short Paper Guidelines and Rubric Overview: For this assignment, you will read the Electrolux and GE Appliances case study, which offers an analysis of the Electrolux's valuation process during its acquisition of GE Appliances in August of 2014. The Electrolux team was tasked with completing a valuation and crafting a final offer for the GE appliance division. In your short paper, you will describe the circumstances of the deal for these two companies, conduct basic valuation calculations, and make a recommendation that would be communicated to senior management. Prompt: Specifically, the following critical elements must be addressed: I. II. Provide a detailed overview of the scenario, including the parties involved, the history, and the specifics of the deal. Calculate the total value of GE Appliances and Electrolux. Hint: We are looking for the total value from Electrolux's point of view. Look at PV values in exhibits 7 through 9: Total Value = GE Appliances + Mabe Interest + Synergies III. IV. Using the projected seven-year valuation, calculate the range of values for GE Appliances. Do the terminal values support the merger? Looking at the numbers in the exhibit, do you think the merger should happen? Is it a good investment? Support your answer with a full explanation of why (or why not), with supporting financial information. Hint: There will be three calculations: a preliminary calculation based on the case study, an expanded year valuation from four to seven years, and an expanded calculation from four to seven years including NWC. Summary of Exhibit 7 Valuation of GE Appliances Revenue Growth -1.00% 0.00% 1.00% 2.00% 3.00% 4.00% In Case No TV No Capex No NWC No TV No Capex NWC Terminal Value Capex NWC 4 Years $457 $718 $984 $1,254 $1,531 $1,812 7 Years -$80 $524 $984 $1,800 $2,475 $3,175 7 Years -$12 $563 $1,158 $1,776 $2,416 $3,079 7 Years -$3,863 -$2,102 -$249 $1,700 $3,752 $5,909 Summary of Exhibit 8 Valuation of GE Interest in Mabe Revenue Terminal In Case No Terminal Values Growth Values 7 Years 7 Years 1.00% $60 -$28 -$394 2.00% $128 $135 $114 3.00% $198 $304 $648 3.80% $254 $445 $1,096 4.00% $268 $480 $1,211 Extension of Exhibit 9 Value of Synergies Revenue Terminal In Case No Terminal Values Growth Values 0.00% $509 $1,019 $2,558 IV. In reference to the tables above, if you were presenting to senior management and had to give one number for each final valuation, what would those numbers be, and how would you arrive at the numbers? Explain your answers. Hint: Think of final valuation as the conservative number. For GE, you should look at 7-year TV, Capex, and NWC. For Mabe, use No TV and slightly higher revenue growth, and for synergies, use the case numbers. V. In the end, did the merger go through or not? Research the outcome and explain what happened. Rubric Guidelines for Submission: Your paper should be 2-3 pages long, double spaced, with 12-pt. Times New Roman font, one-inch margins, APA citations, and at least two references. Instructor Feedback: This activity uses an integrated rubric in Blackboard. Students can view instructor feedback in the Grade Center. For more information, review these instructions. Critical Elements Overview Proficient (100%) Provides a detailed overview of the scenario, including the parties involved, the history, and the specifics of the deal Emerging (75%) Provides an overview of the scenario, including the parties involved, but does not address the history or specifics of the deal in sufficient detail Not Evident (0%) Does not provide an overview of the scenario Value 15 Total Value Calculate Range of Values Support the Merger Final Valuation In the End Writing (Mechanics/Citations) Total values are calculated correctly Range of values is calculated correctly The decision to merge or not merge is fully articulated and sufficiently supported Provides correct answers and supporting explanation that demonstrates complete understanding of each valuation Concludes with a detailed explanation of the merger outcome that is fully supported with evidence The decision to merge or not merge is expressed but lacks sufficient supporting details Provides correct answers, but explanation does not fully support understanding of valuations Concludes with an explanation of the merger outcome, but does not defend with evidence, or lacks sufficient detail No errors related to organization, grammar and style, and citations Some errors related to organization, grammar and style, and citations Total values are not calculated correctly Range of values is not calculated correctly The decision to merge or not merge is not articulated or supported Does not provide correct answers or credible explanations regarding valuation Does not conclude with a detailed explanation of the merger outcome that is supported with evidence Major errors related to organization, grammar and style, and citations Total 15 15 15 15 15 10 100%