Investment Banking World 223

Run a new DCF scenario. Make the following changes to the metrics in the projection period for Solventum: - Update Sales of Product, Sales of Software, and Rentals from 2025 to 2029 to be a 2-year moving average growth rate. - Cost of Product (%of Total COGS), and Cost of software and rentals (% of Total COGS) from 2025 to 2029, to be a 2-year moving average of previous years. - SG&A as % of sales and R&D as % of sales from 2025 to 2029 to be a 2-year moving average of previous years. Output the following - EV of Solventum from the DCF model - Implied DCF share price of Solventum from the DCF model Report share price in $ and round to 2 decimal places, and report EV in whole numbers and in millions ($m). Print your answer here.

Using the accretion dilution model, produce the deliverables outlined below. Round all the figures to whole numbers, present monetary amounts in $ mm and display percentages to two decimals places. The client wants to make the following adjustments to the DCF model. - Revise the COGS assumptions for both Cost of Product & Cost of software and rentals as a % of Revenue, and make it a three-year moving average for 2025E and future years. For years 2026E, 2027E, 2028E and 2029E, add 25 basis points to each year's three-year moving average. Update the gross profit based on these assumptions - Revise the Selling, general and administrative expenses by making it a three-year moving average for 2025E and future years - Revise the Research and development expenses to 10% of sales for years 2026E through 2029E if prior years discounted cashflows exceed $1,000 mm and apply a three-year moving average for years where discounted cashflows are below $1,000 mm - Revise the revenue growth assumptions by changing 2025E growth to -0.5% for both Sales of Product & Sales of Software and Rentals. For years 2026E through 2029E, use a three year moving average for each year and subtract 50 basis points from that calculated growth rate each year - Use a WACC calculated by using only Zimmer Biomet and Smith & Nephew in WACC Calculation as comparables - Use a terminal growth rate of 1.5% Return a short message explaining to me: 1. Sum of Discounted Value of cashflows for 2025E through 2029E excluding the terminal value. 2. Terminal Value. 3. Discounted Terminal Value. 4. Enterprise Value 5. Discounted Terminal Value as a percentage of Enterprise Value.

Assume that no transaction happens with SOLV. Now, calculate the impact of a large investment in AI for MMM shareholders as an alternative capital allocation strategy using the accretion dilution model. Print me back the answer right here, showing: Total new debt from MMM's AI related initiatives Total debt Total after tax Interest Expense PF Net Income Pro Forma EPS EPS accretion/dilution Ending cash Using the following assumptions calculate the impact to EPS for MMM shareholders assuming no transaction with SOLV: - Required investment in technology of $5 billion - half of the investment to be financed from cash in hand and the rest with new debt at a 8.5% cost - Reduction in work force resulting cost savings pre tax of $1 billion - Severance cost associated with the reduction in work force of $4 billion to be financed with $500 million of cash in hand and the rest with new debt at a 12% cost. Assume 50% of the total severance costs will be paid upfront and the remainder over a 4 year period in equal amounts with the first payment beginning in year 1. These costs should be accounted as an expense and not capitalized. Any remaining cash from the debt not used upfront goes to the balance sheet - Increase in power costs associated with the investment in AI of $600 million per year - Apply an incremental 10% tax on power cost for every $100 million of power spend as a pollution compensation policy. Assume the 10% tax doubles for every $100 million of incremental spend. Assume this tax is embedded in the cost. - Assume to bolster balance sheet, MMM also issues equity for equivalent of $2 billion dollars at a issuing price of $250 dollars per share Remember in your answer: EPS should have two decimals. Percentages should have two decimals. All other values given as $ in millions, no decimals.

We want to do some historical analysis. Using stock prices for the 250 trading days up to Nov 19, 2025, calculate the beta for SOLVM to the XLV ETF. Then over the same time period, calculate the beta for MMM to the XLI ETF. Using the CAPM, calculate the cost of equity (Ke) for each company. Assume an expected market return of 12% and a risk-free rate of 3.95%. Print the answers back here. Use the accretion dilution model for stock prices for SOLV and MMM. Use the XLV Healthcare ETF and XLI Industrials ETF files for stock prices for the XLV and XLI ETFs. Use adjusted close prices. Present betas as a decimal, rounded to two decimal places. Present the cost of equity as a percentage, rounded to 1 decimal place.

In the Accretion / Dilution Model, use the capital structure and shares outstanding assumptions for Solventum (SOLV) to calculate levered free cash flow and price per share. Specifically, use the following incremental assumptions: - Revenue Growth Rate: 2.0% beginning in FY25E through the end of the forecast period FY29E - SOLV Interest Rate: 5.50% to forecast interest expense - Other expense (income), net: Remains $0.00 in each period - Cost of Equity: Use the average of cost of equity of the three comps used in the WACC calculation (Exclude Zimmer Biomet) - Capex: 110.0% of D&A beginning in FY25E through the end of the forecast period FY29E With all that, calculate the implied price per share to 2 decimal places. Reply straight back to me here.

Estimate impact to EPS of MMM divesting 1/3, 2/3 or 100% of its holdings in SOLV. Using the accretion dilution model, calculate the EPS impact of selling the different amounts of shares. Assume that MMM has to pay a 20% tax on the proceeds from the divestiture of the first 1/3 of the shares, a 25% tax on the next 1/3 and a 30% tax on the last 1/3 of the shares. Assume that net proceeds from the divestiture are invested in an instruments that pays an 8% interest rate upfront and that interest income is taxed at 35%. Tell me: 1- Percentage of SOLV Divested 2- EPS Accretion / Dilution 3- Pro forma net income Pro forma net income should incorporate the impact of investment of net proceeds from divestiture at 8% and after tax. All figures should be presented with two decimals. Output the final results by making a new Spreadsheet file.

Present all $ output values in million, round all output values to 1 decimal place. Get the following directly from the accretion dilution model: - Enterprise Value (DCF output) - PV of Free Cash Flows (2025–2029) - Terminal Free Cash Flow (2029) - Terminal Growth Rate (g) - WACC Assume that 3M ownership stake = 20% and: 1. Compute 3M’s stake value using the current DCF Enterprise Value. 2. Reduce each of the FCFs for 2025–2029 by 10% and recalculate the PV of those 5 cash flows using the 7.6% WACC. 3. Recalculate the Terminal Value using the reduced 2029 FCF but keeping the same 3% terminal growth rate and 7.6% WACC. 4. Combine the new PV(FCFs) and PV(TV) to estimate a downside Enterprise Value, and compute the implied downside stake value for 3M. 5. Calculate the percentage loss based on the implied stake values Present your findings in a new deck with: - 3M's Current Implied Stake Value - Sum of PV of Revised Discounted FCFs - Recalculated Terminal Value discounted to the Present - 3M's Revised Stake Value - Percentage Loss

Compare the average tenure of Solventum's board members to the average of its peers' board members (excluding Solventum). Give their average tenure. Then, state which is larger and by how many years. Use the data available in: BLCO DEF14A 2025, 5Form DEF 14A for GE Healthcare Technologies INC filed 04:10:202, PEN Form DEF 14A 2025, ZBH DEF14A 2025, and March 21, 2025 - DEF 14A SOLV. Print your answer back here. Follow these assumptions: 1. Solventum's peers and/or competitors are considered to be those companies listed in the comps folder 2. The competitor average is calculated using all director tenures individually, and not by averaging the averages of each company 3. Average tenure should be presented in years, rounded to 2 decimal place 4. If a member of a company's board of directors was a member prior to a spin-off of the company, the tenure starts on the year of the spinoff 5. Nominated board candidates that have not yet served are considered to have 0 years and 0 months of tenure 6. Tenure for each individual board member should be calculated based on filing date of the source doc and to the nearest year and month before subsequent calculations. Assume tenure began at the midpoint of the year/month stated if an exact date is not given.

Using the merger model and 0000066740-25-000089, please calculate: 1. The Number of Shares Repurchased. 2. The Revised Enterprise Value. 3. The Revised EV/EBITDA multiple for 3M. 4. The Revised P/E ratio for 3M. Present all monetary values in million dollars, rounded to nearest million. Round the number of shares, ratios and percentages to two decimal places. Print your reply back here as a short message. Assumptions and guidance for deliverables: - Note that debt to equity ratio for 3M as of end September 2025 can be calculated using 3M Total Equity in the other file. - Assume that 3M Share price dropped by 8% before the buyback and remained flat after that. - Assume that the amount of proceeds from sale of Solventum are used to paydown debt by 3M to bring debt to equity ratio down to 2.60x. - The left over proceeds from sale of Solventum after paying debt is used by 3M to repurchase shares. - Assume that EBITDA can be adjusted to 2025E EBITDA by multiplying it with 1.05 for simplicity. - For the enterprise value working, use the cash in tab "Assumptions S2". - For the Revised P/E ratio, use the TTM net income given in "Assumptions S2" tab.

Calculate the intrinsic value per share of Solventum based on these assumptions. Use the accretion dilution model. - Lower the gross margin % to 52% for the forecast period 2026E through 2029E. - Change Research & Development expenses as % of Sales to 15% wherein the discounted cashflow is higher than $1,100 mm in the preceding year, and to 10% wherein the discounted cashflow is lower than $1,100 mm in the preceding year for the years 2026E through 2029E. - Remove the comparable Koninklijke Philips from the WACC calculation. - Change the terminal growth rate to 2.0%. - Convert fixed CAPEX to a % of sales, and project using the last 3-year moving average to calculate it for the years 2025E through 2029E. - Update the discounting with 1/12 for 2025E, given that we are at the start of Dec 2025. Adjust the future years discounting convention accordingly. - Pull shares outstanding and Net debt from the "Assumptions S1" tab. Round the final deliverable to two decimal places and express in $ terms. Give me your response right here.

Evaluate the sensitivity of EPS impact to synergies and cost of new debt for the acquisition of SOLV by MMM using the accretion dilution model. Create a new tab in the file, with a table to show EPS impact (accretion or dilution). - Show synergies in increments of $300 million (300m, 600m). - Show cost of new debt in increments of 5ppts (15%, 20%). - Show the price premium per share at different synergy levels. - Assume the price premium per share is 25% for no synergies and increases by 2.5ppt every $100 million in synergies. - Two dec points only.

Under Scenario 1 in the Accretion / Dilution Model, 3M will use 50% debt / 50% equity. $250 million in pre-synergies were identified. Use the following assumptions in the Assumptions S1 tab of the Accretion / Dilution model: - Pre-Tax Synergies: $250mm - Control Premium: 25% - % Stock: 50% - % Debt: 50% - Interest Rate on New Debt: 8% - Fees: 1.5% of Updated Take-Private Enterprise Value - Solventum Share Price: Use the Solventum VWAP for the 75 trading days up to November 19, 2025. To calculate the price for each trading day in VWAP, use the formula (High + Low + Close) / 3 We need the Revised Accretion / Dilution percentage for 3M. Round percentages to 2 decimals points. Write back to me with your response now.

Perform a value-creation analysis based on scenario 1 using the accretion dilution model to assess whether Scenario 1 creates or destroys value for 3M Shareholders. Assumptions: 1. 3M Levered Beta is 1.15 2. Risk free rate is 4.00% 3. Equity risk premium is 5.50% 4. Calculate cost of equity using CAPM: Risk-free rate + Beta*Equity Risk Premium 5. Implied Return = SOLV Net Income/Purchase Price Paid 6. Assume Spread is calculated by Implied Return - WACC 7. For PF WACC, use 3M's existing cost of debt from Scenario 1 and assume the incremental acquisition debt carries a 10.00% interest rate (consistent with Scenario 1 assumptions). Print the output here. Format all final percentages to two decimal places.

Solventum (SOLV) announced a $2.0 billion strategic expansion funded with 70% debt and 30% equity, which caused its share price to increase by 5% relative to the closing price on 11/18/2025. Using the most recent accretion/dilution model rerun scenario 1, assuming the updated SOLV share price. Determine the revised premium 3M would pay under the updated assumptions to keep EPS accretion flat relative to the level from the original 30% premium case. Write back to me with what I requested. In the output, round the percentage to two decimal places.

In the Accretion / Dilution Model, assume stock-based compensation equals 3% of the sum of operating expenses and cost of goods sold, calculated using the model’s existing methodology, and added back to free cash flow in each forecast year. Using the “DCF-Solv” tab, provide an updated estimate of the present value of forecast-period cash flows, excluding the terminal value, under the following assumptions: - Mid-year discounting - Revenue growth of 1.0% from FY2025E through the end of the forecast period Give me figures in USD millions, rounded to two decimal places. Reply right here.

In the Accretion / Dilution Model, there is an error in the calculation of Cost of Product and Cost of Software and Rentals. Calculate the correct revised implied Enterprise Value after the divestiture. Please fix the linking and use the correct formula in the "DCF-Solv Tab" to calculate Product Gross Margin and Software & Rentals Gross Margin to help with the next analysis: In the Accretion / Dilution Model, Solventum's Purification & Filtration Segment (P&F) is being divested at the end of 2025E / beginning of 2026E and should be reflected in financial projections in the "DCF-Solv" tab. The current assumptions in the model for the Purification & Filtration Segment are as follows: - Revenue Growth Rate: 2.0% annually after 2024A - Gross Margins: P&F Gross Margins constant since 2024A - Operating Expenses: P&F Opex % of Revenues constant since 2024A P&F's 2024A results can be in Solventum's 2024 Annual Report. Round financial figures to 2 decimal points, putting them in USD millions. Write a reply to me here with the requested value.

Using the 3Q 2025 3M 10Q and the accretion dilution model, calculate the following deliverables. Present all values in millions ($mm), number of shares in millions (mm), and round to whole numbers. For percentages, two decimal places. Give me the answer straight back here as a message. Base your deliverables on the following assumptions: - For the projections of 2026E cashflow available for buyback, use the extrapolation formulae (12/9 multiplication convention i.e multiply by 12/9) for specific income statement and cashflow items to convert them from nine-months ending September 2025 to full year January to December 2025. For clarity, Income statement and cashflow items on which extrapolation formulae is applied include revenue, operating expenses, depreciation & amortization, Net interest expense, Net income, cashflow from operations and CAPEX (considered as sale of property, plant and equipment). - Assume a growth rate of 5% across specific cashflow statement items calculated using extrapolation formulae for 2025E to calculate the projected cashflow statement items for the year 2026E. Consider CAPEX as sale of property, plant and equipment for the above calculation. Cashflow items on which 5% growth is applied include cashflow from operations and CAPEX. - Use 3M data in "Assumptions S2" tab for required data in the accretion dilution model for scenario 2. Calculate for me: 1. The free cash flow available for buy back in 2026E using the above assumptions by incorporating cashflow from operations and CAPEX in the formulae. 2. The buyback capacity of 3M using the Cashflow available for buy back in 2026E calculated above, minimum cash balance of $100 million, existing cash balance and proceeds from sale. 3. The number of shares that can be repurchased by 3M with this capacity. 4. The percentage reduction in shares outstanding of 3M if the company uses its entire capacity for a buyback.