Is Sun Microsystems a good strategic fit for Oracle

Suggested Assignment Questions

The instructor may consider the following study questions:

1.Is Sun Microsystems a good strategic fit for Oracle?

2.What approaches would you use to place a value on Sun Microsystems?

3.Assuming a discounted cash flow valuation:

a.What rate of return should Oracle require on the acquisition?

b.What base-case cash flows do you forecast?

c.What is your estimate of terminal value?

d.What is the enterprise value of Sun Microsystems? What is the equity value?

4.Conduct a multiples analysis to value Sun. What economic fundamentals are reflected in the multiples?

5.Identify the synergies and conduct a sensitivity analysis to estimate the effect of synergies on enterprise value.

6.If a competing bidder appears, how high a price should Oracle be willing to offer?