J.P.Morgan Investment Banking Pitch Book
KEY TRANSACTION CONSIDERATIONS
A strategic buyer could realize at least $25 million of cost
synergies, implying approximately $9.00 of equity value per share
Cost Reduction
Kerzner is expected to have corporate overhead of
approximately $50 million, or 6.5% of revenues in
2006
Executive compensation and benefits were $6
million in 2004
Kerzner incurs an estimated $10 million in public
company costs
The balance is assumed to encompass travel and
entertainment expenses, new project pursuit
costs and legal costs
Corporate expenses as a % of revenue (2006E)
6.5%
KZL¹
Source: Equity research
1 JPMorgan estimate
JPMorgan
4.9%
STN
3.5%
GET
2.8%
WYNN
Potential synergy impact
($ millions except per share amounts)
Cost synergies
Present value¹
Implied value / share²
1 Assumes a 9.5% discount rate and 2% perpetuity growth
z Based on 38.7mm diluted shares outstanding
1.8%
MGM
1.8%
$25
$340
$8.78
BYD
1.7%
LVS
$30
$408
$10.54
$35
$476
$12.29
1.4%
HET
KERZNER INTERNATIONAL
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