Goldman Sachs Investment Banking Pitch Book
Goldman
Sachs
PRELIMINARY CONFIDENTIAL DRAFT-SUBJECT TO CHANGE AFTER FURTHER DILIGENCE AND REVIEW
INVESTMENT BANKING
DIVISION
e Illustrative Spin-Off Analysis
(Cont'd)
(US$ in millions, except per share amounts)
■ Illustrative per share value outcomes to Opal shareholders in spin-off scenarios are driven by potentially achieving a public multiple re-rating to higher
multiples that are more in-line with Client peers (-4.0x FY2014 EBITDA) and Enterprise peers (~7.0x FY2014 EBITDA) trading multiples today
100% Spin-Off w/ No Cash Dividend¹
Illustrative Sensitivity Analysis
Illustrative Sensitivity Analysis
Assumes a spin-off of Enterprise to Opal
shareholders, with no cash dividend to
shareholders
Illustrative Value
% Own. Per Share
100.0 %
$5.80
100.0 %
9.33
Client Equity Stake
Enterprise Equity Stake
Illustrative Total Value
Illustrative After-tax Separation Costs
Illustrative Adjusted Total Value
$15.12
(0.45)
$14.67
Enterprise 5.0 x
EV/FY14 7.0.x
EBITDA 9.0 x
Summary Dissynergy Assumptions
☐The illustrative spin-off analyses make a number of assumptions
regarding potential operational, financial and transaction-related
dissynergies, including:
Client EV / FY2014E EBITDA
2.0 x 4.0 x
6.0 x
$10.05 $ 12.13 $ 14.22
12.58 14.67 16.75
15.12 17.20 19.28
$580 million of annual dissynergies at Enterprise related to sourcing
(-2.7% of Enterprise revenue and 5.5% of ESG revenue)
-
$100 million each of additional annual corporate and public company
costs at both separated entities that would need to be duplicated
- $1 billion of one-time transaction-related separation costs (taxed at
21%)
Does not assume any DFS related-financial impact
-35% tax rate on repatriation of offshore cash balances for
deleveraging purposes
- Lower leverage capacity as a result of lower pro forma EBITDA
related to operational dissynergies
Other spin-off variations include
- 100% spin-off with a cash dividend to
shareholders that is funded by additional debt
raised at Client and/or Enterprise
Source: Management and company reports
Illustrative analysis assumes Client trades at 4.0x FY2014 EBITDA and Enterprise trades at 7.0x FY 2014
2 Assumos a 21% tax rate.
Assumes taxes of $1.5 billion based on repatriating $4.2 billion offshore cash, taxed at 35% for Client deleveraging
Sponsored spin-off in which a sponsor makes an
equity investment for up to a 49.9% stake in
Client, with those cash proceeds being used to
pay a cash dividend to shareholders
Additional leverage at either entity could potentially
impact the pro forma trading multiples, thus changing
the value shareholders may receive
Similarly, a sponsor's investment in Client can be at a
negotiated value discount, thereby also affecting the
value shareholders may receive
Impact on Value from Various Illustrative Dissynergies
Source of Dissynergy
$580mm Annual Sourcing @ Enterprise at 7x
$100mm Annual Corporate and Public Company Costs @ Enterprise at 7x
$100mm Annual Corporate and Public Company Costs @ Client at 4x
Tax on Repatriation of Off-Shore Cash³
$1000mm of One-time Transaction Expenses (Taxed at 21%)
Total Dissynergy / Share
Per Share Amount
$2.34
0.40
0.23
0.85
0.45
$4.27
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