Net Gains from Synergy: SBC Acquisition of AT&T 2005 Bottom Line Operations savings Staff savings Sales & support Top Line Gains Severance costs Annual gains Terminal value Present value Sum 13.4 2006 0.2 2007 0.4 0.1 0.3 0.8 0.375 -2 -0.825 2008 0.6 0.2 0.4 1.2 0.375 -1 0.575 2009 0.9 0.3 0.6 1.8 0.375 2010 1 0.4 0.6 2 0.375 2011 0.9 0.4 0.5 1.8 0.375 2012 0.8 0.4 0.4 1.6 0.375
0.2 -3 -2.8
2.175
2.375
2.175
1.975 17.95 11.63
-2.59
2.5
-0.71
0.46
1.60
1.62
1.37
Top-line gains
Assumptions Growth after 2012 WACC
2
0% 11%
Bottom-line gains
1.5 1 0.5 0 1 2 3 4 5 6 7