(8) |
Assumes all shares of SDPI Common Stock eligible to select Cash Consideration v. Stock Consideration are
exchanged for cash (i.e. maximum cash consideration is received) |
With respect to the SDPI Selected Public
Companies, Piper Sandler calculated two measures of capitalization: market equity value and implied enterprise value (Implied EV). Market equity value was determined by multiplying the fully diluted outstanding shares of each SDPI
Selected Public Company by its closing share price as of March 5, 2024 (the last trading day before the announcement of the Merger). For purposes of this analysis, Piper Sandler calculated the Implied EV of each SDPI Selected Public Company by
(i) adding to such SDPI Selected Public Companys market equity value (A) its Net Debt (whether positive or negative) and (B) the value of such SDPI Selected Public Companys preferred stock
and non-controlling interest, and (ii) subtracting the value of such SDPI Selected Public Companys equity investments, in each case, determined as of such SDPI Selected Public
Companys most recent reported quarter-end. For each of the SDPI Selected Public Companies, Piper Sandler then divided such SDPI Selected Public Companys Implied EV by its
(i)(A) earnings before interest, taxes, depreciation and amortization (EBITDA) for the twelve-month period (LTM) ended September 30, 2023 (LTM), (B) projected EBITDA
for calendar year 2023 (except as noted in footnote 1 accompanying the SDPI Selected Public Companies analysis (see table below)), and (C) projected EBITDA for calendar year 2024, and (ii)(A) FCF for the LTM, (B) projected FCF for
calendar year 2023 (except as noted in footnote 2 accompanying the SDPI Selected Public Companies analysis (see table below)), and (C) projected FCF for calendar year 2024, to calculate the Implied EV/EBITDA multiples and the Implied
EV/FCF multiples for the respective SDPI Selected Public Company. As used in this section entitled Opinion of Piper Sandler: (i) Net Debt of a company refers to such companys
cash and cash equivalents minus such companys total indebtedness, in each case, as of a specified date, and (ii) FCF of a company refers to such companys EBITDA, adjusted for, (A) in the case of SDPI, expenses
related to intellectual property litigation, employee severance, non-cash bonuses, stock-based compensation, and other expenses, (B) in the case of DTI, expenses related to stock options,
monitoring fees, employee retention credits, and other expenses, and (C) in the case of the SDPI Selected Public Companies and DTI Selected Public Companies, adjustments for non-recurring, one-time, non-cash, and other types of expenses, as identified by publicly available sources, minus such companys publicly available capital expenditures.
The foregoing calculations resulted in the following maximum, 75th percentile,
mean, median, 25th percentile and minimum Implied EV/EBITDA multiples and Implied EV/FCF multiples for SDPI Selected Public Companies:
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Multiple |
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Mean and Median (Low to High) |
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Implied Price Per share of SDPI Common Stock (at Mean and Median) |
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Implied Exchange Ratio (at Mean and Median) |
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Implied EV/LTM EBITDA |
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4.0x |
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4.1x |
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$ |
1.06 |
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$ |
1.07 |
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0.341 |
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0.345 |
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Implied EV/2023 Projected EBITDA |
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3.9x |
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4.2x |
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$ |
0.91 |
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$ |
0.96 |
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0.293 |
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0.310 |
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Implied EV/2024 Projected EBITDA |
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4.1x |
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4.2x |
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$ |
1.24 |
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$ |
1.29 |
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0.401 |
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0.415 |
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Implied EV/LTM FCF |
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7.4x |
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8.2x |
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$ |
0.88 |
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$ |
0.95 |
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0.284 |
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0.308 |
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Implied EV/2023 Projected FCF |
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7.6x |
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8.7x |
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$ |
0.61 |
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$ |
0.66 |
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0.195 |
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0.213 |
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Implied EV/2024 Projected FCF |
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6.2x |
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6.4x |
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$ |
1.62 |
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$ |
1.66 |
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0.524 |
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0.535 |
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Piper Sandler then compared the implied prices per shares of SDPI Common Stock and the implied exchange ratios
(calculated, in each case, using the Mean and Median of the respective multiple) to the Merger Consideration to be paid in the First Merger to the Unaffiliated Holders (other than DTI and its affiliates, if any) for their shares of SDPI Common Stock
(other than Dissenting Shares) pursuant to the terms of the Merger Agreement.
Selected Public Companies Analyses DTI Standalone Analyses
Using publicly available information, Piper Sandler compared selected financial data of DTI with similar data for selected
publicly traded companies (each, a DTI Selected Public Company) which Piper Sandler
4