Mini Case: Valuing ConocoPhillips' acquisition of Burlington
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Mini Case: Valuing ConocoPhillips' acquisition of Burlington Resources
a) Using the method of multiples based on enetrprise value to EBITDAX, the P/E ratio and the enterprise value to EBITDA ratio, what should the acquisition price be for Burlington Resources shares? Use the following companies as comparables for your analysis: Chesapeake Energy, XTO Energy, Devon Energy and Apache. Year end 2004 balance sheets and income statement , summary information as well as market capitalization data are provided in Exhibit for Burlington Resources and each of the comparable firms.
b) Which of the four firms used as comparables do you think is the best comparison firm for Burlington Resources? Why?
c) Based on your analysis of comparables, did ConocoPhillips pay too much or find a bargain? Why or why not?
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