1. Is Sun Microsystems a good “Strategic” fit for Oracle? Why or why not?
2. Prepare a Discounted Cash Flow Analysis to Value Sun on a “stand alone’ basis (EXACTLY LIKE WE DID FOR NIKE).
A. What rate of return should Oracle require on the acquisition of Sun (see Tips and Pointers below)?
B. What base cash flows do you forecast?
C. What is your estimate of Terminal Value?
D. What is the Enterprise Value of Sun? What is the Equity Value? Per share value?
3. Separately, conduct a “Comparables” analysis to value Sun (see Tips and Pointers below). What economic
fundamentals are reflected in the multiples?
4. Identify any synergies and conduct a sensitivity analysis to estimate the effect of synergies on enterprise value?
5. What is the per share Value of Sun it becomes part of Oracle, i.e., with the synergies?
6. If a competing bidder appears, how a high a price should Oracle be willing to offer?