. Robin’s 10 pts A fast-food hamburger restaurant chain (Robin’s) trades publicly at 8x EV/EBITDA. EV= (a) market value

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. Robin’s 10 pts A fast-food hamburger restaurant chain
(Robin’s) trades publicly at 8x EV/EBITDA. EV= (a) market value of
equity + (b) net debt. Few investors know of Robin’s hi-growth
“health food” subsidiary, “Green Meals.” Health food represents 10%
of Robin’s total EBITDA. Publicly traded health food operations are
priced at 16x EV/EBITDA. Robin intends to “spin-off” Green Meals
shares to Robin’s shareholders. The spinoff is on a ‘one share for
one share basis.’ How much extra value is created for each Robin’s
share after such a spin off? Please complete the tables below.
Present Situation Robin’s Share Price $ 22 per share EBITDA $110
million EV $880 million Debt -0- Excess Cash -0- Shares Outstanding
40 million Pro Forma after Spin off Robin’s Share Price ? per share
Robin’s EBITDA ? EV ? Debt -0- Cash -0- Robin’s Shares Outstanding
40 million Green Meals Share Price ? per share EBITDA ? EV ? Debt
-0- Cash -0- Green Meals Shares Outstanding 40 million