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Investment Banking

According to Thomson Reuters, Warner Music Group has sold off its entire stake in Spotify for $504 million. Warner Music in May said it had sold around 75 percent of its Spotify stock for $400 million in proceeds, and in its latest earnings call confirmed the sale of the rest of its stake. With 180 million ad-supported active monthly users in its stable, Spotify is now larger than rival Apple Music. The Stockholm, Sweden-based streaming service,which is run by founder and CEO Daniel Ek, recently went public on the New York StockExchange.

Deal In Brief

Deal Value (US$ Million) 504Deal Type AcquisitionSub-Category Majority AcquisitionDeal Status Completed: 2018-08-07Deal ParticipantsTarget (Company) Spotify ABAcquirer (Company) Undisclosed Investor(s)Vendor (Company) Warner Music Group Corp.Assume you were in the team for preparing the valuation of Spotify shares for the deal.You were required to produce an individual report (word limit 2500). The report needs toaddress below aspects:

1. Perform the Comparable Companies Analysis (CCA) for Spotify shares and explainthe details of your preparation (e.g. rationales and footnote where you obtain thedata).

2. Critically examine whether CCA is a suitable valuation method and briefly discuss what alternative valuation analysis can be used. Assessment and Submission

The main assignment must be submitted by 3pm on 5th December 2018 via Turnitin. Students can expect to receive individual feedback on their work via Turnitin by Lectures

[usually 3 weeks from date of submission]

Note:1. You will need to submit your report (word, pdf) and your excel spreadsheet(CCA) for the assignment separately (two links will be available). Failure to submit the CCA spreadsheet might have negative impact on your marks.2. The school policy for late submissions is applied.when work is submitted late with no prior authorisation, a penalty of 10 marks will be deducted from the actual mark for each calendar day, or part of a day, by which the deadline is exceeded. After seven days from the initial deadline, a mark of zero will be awarded. Late work should be submitted electronically in the usual way.Content needs to be covered in your report:

Part 1:1.

Brief introduction to Spotify:Conduct wide range of research on Spotify: get as much as information about Spotify as possible, dig deep, use SEC website, Eikon and reliable source 2. Identify comparables: provide rationales as to why you choose those companies ascomparabls.3. Obtain relevant information (see manual-getting Data for CCA).Important information: you will need to use Thomson Reuters Eikon to obtain consensus estimates. We currently only have 3 Thomson Eikon PCs in the library.

To book an hour slot, you need to contact library customer servicesteam, which they can do in person at the library desk, by emailing or phoning 01792 295500.4. Use CCA excel pro-forma (available on Blackboard) to complete the CCA analysis for Spotify. Incorporate your CCA results in the report. Pls footnote where you obtain the data and provide screenshot in the appendices (This is to indicate the ownership of your work and guard against collusion case). You also need to explain any adjustments made (e.g. non-recurring, calendarization etc.) and why it is needed.

Part 2:1.

Select relevant literature and incorporate into the discussion on whether CCA is a suitable valuation method.2. If CCA is not sufficient or not appropriate under some circumstances, discuss whether there are alternatives or any other superior valuation methods.

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