Gains/costs from acquisition
Celtel
These are relative to being a stand-alone private company
Source of gain /cost IPO MTC MTN
Liquidity +20-30%? 0 0
Costs of issuance -5-10% 0 0
Revenue or growth
synergies 0
Costs of integration to
achieve revenue gains 0
Cost savings 0
Costs of integration to
achieve cost savings 0
Gains from financial
restructuring 0
Gains from business
portfolio restructuring 0
Meulenbroek's Memo
All numbers in USD millions
Upfront Years 1-3 Later years
Offer price 3400
Transactions costs of the acquisition (7%) 238
Estimated revenue gains (network effect) 80 150
Estimated cost savings (overhead) 25 40
Estimated cash management improvements 15 30
Estimated gains from divestitures
Estimated restructuring costs 25
Estimated growth rates 25% 5%
Estimated financing cost - debt 7% 6%
Estimated financing cost - equity 13% 13%
Estimated country risk premium 5% 4%
Estimated stand-alone value (IPO) 2000
Celtel: Synergy Valuation
All numbers in USD millions
Upfront Years 1-3 Later years
Offer price 3400
Transactions costs of the acquisition (7%) 238
Estimated revenue gains (network effect) 80 150
Estimated cost savings (overhead) 25 40
Estimated cash management improvements 15 30
Estimated gains from divestitures
Estimated restructuring costs 25
Estimated growth rates 25% 5%
Estimated financing cost - debt 7% 6%
Estimated financing cost - equity 13% 13%
Estimated country risk premium 5% 4%
Estimated stand-alone value (IPO) 2000
Cash flows 2006 2007 2008
Estimated revenue gains (network effect) 80 100 125
Estimated cost savings (overhead) 25 31 39
Estimated cash management improvements 15 19 23
Estimated gains from divestitures 0 0 0
Estimated restructuring costs -25 -25 -25
Net effect 95 125 163
TV 2376
Tax rate 17%
Debt % 34% $ 3.6 billion
Equity % 66% $ 7.0 billion
WACC 15.5% 15.5% 15.5%
PV 82 94 1646
Sum of PVs 1822
Value of Celtel to MTC (standalone + gain) 3822
Less cost of the acquisition (price + fees etc) -3638
Net gain (loss) 184
Effect on MTC if rival wins?
2009+
150
40
30
0
0
220
14.3%