J.P.Morgan Investment Banking Pitch Book
VALUATION SUMMARY
Valuation summary
Equity value per share
Key:
Publicly-traded comparables
20.0x-23.0x 2008E EPS¹
(Implies 15.8x-18.2x 2008E EPS
for upside case)
Precedent transactions
12.0x-14.0x 2008E EBITDA1,2
Discounted cash flow analysis³
9.5-10.5% WACC
3.0-3.5% perpetuity growth rate
$2-6mm per acre land value
Sum of the parts
LBO analysis³
18-22% return threshold
11.5-13.5x exit FV/EBITDA
8.25-8.75% cost of LBO debt
$2-6mm per acre land values
Upside Case
JPMorgan
Price prior to announcement:
$70.367
$65.00
$66.50
$60.50
$71.00
$75.00 !
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1
1
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1
$73.00!
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1
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Offer price:
$81.00
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I
$79.50
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T
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$80.50
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T
$80
$83.50
Adjusted Upside Case4
$84.50
$92.50
$92.50
$84.00
Franchise value could
potentially provide ~$6 per
share of additional value
$99.50
$97.50
$20
$40
$60
Note: Valuation based on the Upside Case projections provided by management, sensitized for valuation assumptions
¹ Implied equity value discounted to 2006 using an estimated equity cost of capital of 12.5% (midpoint of sensitivity range)
2 Assumes full consolidation of Palmilla & Reethi Rah EBITDA and debt; based on "GAAP EBITDA" as detailed in the EBITDA build-up in the appendix
3 Based on "Adjusted cash EBITDA" as detailed in the EBITDA build-up in the appendix
+ Represents the incremental value potential of the Adjusted Upside Case
$100
$120
5 Assumed land value appreciation of 5% per year until sold in exit year
* Represents additional value potential from two additional large development projects over 10 years (see detail in appendix)
7 Share price data as of 3/17/06; last trading day before public announcement
$140
PROJECT PLATO 11View entire presentation