[FTMBAM&A2012] Takeover Case: Questions about Cutoff Date and Tax Rate

[Emma Zhu]

Hello,

 

How do you treat/adjust the different cutoff dates of fiscal year for Oracle (end of May) and Salesforce (end of Jan) in the pro forma and has/gets analysis?

 

Do you use the effective tax rate of Oracle or Salesforce to calculate the post-acquisition Salesforce? I guess it should be the tax rate of the target. But can Oracle absorb Salesforce into the parent company and use Oracle’s lower tax rate?

 

Thanks in advance for feedback!

 

Emma

----------------

MBA 2012, Berkeley-Haas

510.710.6168

about me: about.me/emmazhu

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[mariana silva]

Regarding the different fiscal year cutoffs, we have to put them on an equal timing (probably have to prorate the #s or use 10Qs).

Here are some helpful videos that go over how to do this: (fast forward to minute 3): http://www.youtube.com/watch?v=POa1Fd5miak

 and http://www.youtube.com/watch?v=GQuKFzqGpiM&feature=related

[Mohamed Shommo]

Emma,

 

1-      To adjust the cutoff date you need to look at the last twelve months before the acquisition , remember that the acquisition  is  taking place in Jan.

2-      In the  has/get EPS calculations  you need to make sure that the salesforce NET Iincome is calculated using Oracle because that will flow to the shareholders in reality.

Thanks,

Mohamed

[Bundit]

Mohamed,

In response to your answer#2, I assume you are addressing which tax
rate to use, I'm still wondering if we can use Salesforce's tax rate
because the consideration will be 100% cash and assuming that we may
not have to combine the two companies. Keeping them separate may allow
us to use tax benefit of Salesforce?

Thanks,

Bundit

On Mar 10, 12:17 am, Mohamed Shommo <mohamed_sho...@mba.berkeley.edu>
wrote:

> about me: about.me/emmazhu<http://about.me/emmazhu>
> calendar: tungle.me/emmazhu<http://tungle.me/emmazhu>

[Bundit]

Sorry please disregard my question, I accidentally swap the number.