Financial Management - SingTel acquire Optus, Is it fair & reasonable?

(Q1)The erect price given by SingTel for the acquisition of Optus is non a fair and reason equal one. According to 3 change financial valuation models (discounted cash flow abstract, EBITDA & P/E Ratio - see attached Appendix), Singtel is also resistive high premium to buy Optus in all in a higher place foolet approach analysis. The SingTel call for allow for bring more confidence to the telecommunications market, they are paying an A$4 million premium, Optus take to bes around A$13 billion only. My analysis is based on a close observation of the dislodge fortunes of Opus over the endure decade. It wasnt until 1998 that the company finally saturnine around, under the leadership of Chris Anderson, and began to offer rival in the market. A year later it had interpreted over the position of competition leader from AAPT. At the identical sequence its broadband network started to carry out and regenerate confidence was clearly reflected in the companys activi ties from late 1999 to mid-2000. barely wherefore the For Sale sign went up and unfortunately some(prenominal) investment programs, notably the broadband upgrade, were halted. However, at the height of its mastery the company cute itself on the basis of continued achievement in the future, and in particular its revenue potential in broadband.

At that time I agreed that, if the company were able to maintain its drive, its value could indeed reach the $16 - $17 billion mark by 2003/ 2004. Yet any take-over would inevitably engender disruption, as well as a probable change in leadership, direction, strategies and visions. As a general rule this will call down at least one year of inef fectiveness. This would badly chemical bon! d growth and as a result the blue-sky valuation of $17 billion would be unrealistic. Furthermore, it had also become ostensible worldwide, that unsettled communications were not going to be a big... If you lack to get a full essay, order it on our website: OrderEssay.net

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