Google Admob
1. How would you value Google acquisition of AdMob at the end of 2009? As a stand-alone firm by filling in the following excel table attached.
AdMob’s Nov. 2019 revenue was estimated to be 60million. This suggests that Google’s offers price for AdMob is a multiple of 12-17 times. AdMob was acquired for $750million.
2. As an acquisition target?
*Financials are provided in word doc.
Google
-AdMob Deal
| Google Inc | ||||||||||
| Risk Free Rate, 1-year Treasury Note: Average for May, 2010 | 0.35% | |||||||||
| Risk Free Rate, 10-year Treasury Note: Average for May, 2010 | 3.42% | |||||||||
| Required Market Risk Premium relative to 10-year Treasury Note | 5% – 6% | |||||||||
| Beta | 1.12 | |||||||||
| Google’s estimated ke (based on case Exhibit 18) | ||||||||||
| Adjustment for Size, Liquidity | 15% | |||||||||
| Admob | ? | |||||||||
| Admob’s FCF Estimates (in millions) | 12/30/09 | 12/30/08 | 12/30/07 | 12/30/06 | 12/30/05 | |||||
| Net Revenues | $146.48 | $107.04 | $77.93 | $55.68 | ||||||
| EBIT(1-T) | $31.29 | $13.97 | $11.83 | $15.35 | ||||||
| Depreciation | $10.10 | $7.31 | $5.32 | $2.57 | ||||||
| Capex | $23.18 | $10.67 | $11.91 | $11.37 | ||||||
| Change in NWC | $137.24 | $28.45 | $7.56 | $11.34 | ||||||
| Free Cash Flows | ||||||||||
| AdMob’s Terminal Value estimates | ||||||||||
| Warranted MV firm / EBIT (1-tax rate), using Google’s 2009 multiple | ||||||||||
| Warranted MV firm / Sales, using Googles’s 2009 multiple | ||||||||||
| Value of AdMob | ||||||||||
| Using, Warranted MV Firm / EBIT (1-tax rate); as multiple | ||||||||||
| Using, Warranted MV Firm / Sales; as multiple |
&”Arial,Bold”Exhibit xx: Google Inc. Capital Market Data
Sheet1
8%
8%
4%
Millenia Media $ 51.00
Yahoo $ 32.00 11%
Microsoft $ 23.00 8%
Quattro Wireless $ 21.00 8%
JumpTap $ 11.00 4%
AOL $ 7.00 3%
Others $ 65.93 26%
$ 278.93
http://www.mediapost.com/publications/?art_aid=117926&fa=Articles.showArticle
How would you value Google acquisition of AdMob at the end of 2009?
1. As a stand-alone firm by filling in the following table. AdMob’s Nov. 2019 revenue was estimated to be 60million. This suggests that Google’s offers price for AdMob is a multiple of 12-17 times. AdMob was acquired for $750million.
2. As an acquisition target?
Finacials are Provided Below:
exhibit 18: