notwithstanding) evenly throughout the year. We take a six-month factor because we are valuing the company as of January 1, 1999; if we had chosen another month we would have to offset the discount factor by one-half year, plus the number of months.

Under the Business as Usual scenario, Heineken's equity value is NLG 33.5 billion, or NLG 107 per share, as shown in Exhibit 13.5. To calculate the market equity value, we add the market value of nonoperating assets such as excess cash, marketable securities, and investments in unconsolidated subsidiaries to the value of operations to obtain the enterprise value. We then subtract debt, minority interest, and other non-equity sources of financing to obtain the equity value.

The value of Heineken's operations is about four times that of its beginning invested capital (including goodwill). Our results seem consistent with the Business as Usual scenario, given that returns on invested capital are about twice that of its WACC.

We also valued the other two scenarios for Heineken. The results are summarized in Exhibit 13.6. In the Price War scenario, we made two adjustments to the assumptions. We assumed that revenue growth would be 0 percent nominally, or negative 1 percent to 2 percent in real terms, because of changes in price mix. We

Exhibit 13.5 Heineken—Value of Equity

also assumed that consolidation would be minimal; only 1 percent (rather than 3 percent) of revenue growth would come from acquisitions. This scenario yields a value of NLG 87.6 per share, an 18 percent discount to the Business as Usual scenario. While a price war could result in even lower prices, it couldn't be sustained for the entire 15-year scenario. Our forecast reflects this outlook.

For the Market Discipline/Industry Consolidation scenario, we allowed prices to rise at the same rate as in the base scenario. But we increased the amount of growth through acquisitions so that by the end of the short-term forecast, Heineken would have a 7 percent market share. This resulted in an equity value of NLG 147.4, a 38 percent premium over the Business as Usual case.

We assigned a higher probability to the upside scenario because we think Heineken's aggressive acquisition strategy will continue to bear fruit. We also believe

Exhibit 13.6 Heineken—Summary of Scenario Values

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