- 52 -
comparable companies; and (5) J.R. Simplot Co. was more liquid than
most of the comparable companies.
Dr. Spiro concluded that J.R. Simplot Co. was smaller and less
profitable than the average comparable company but was growing
faster and had slightly greater liquidity than the comparable
companies. (Dr. Spiro believed that J.R. Simplot Co. most closely
resembled ConAgra.19) Dr. Spiro used a weighing process for his
valuation ratio indicators and as a result determined a
$719,809,754 fair market value for J.R. Simplot Co. under the
market approach.
Dr. Spiro then averaged the values he determined for J.R.
Simplot Co. under the market ($719.8 million) and income ($721
million) approaches, arriving at $720 million.20
(According to Dr. Spiro, the value of J.R. Simplot Co. arises
from its resources, which, if properly used, could have yielded a
higher return. Dr. Spiro believed that if the Company had
sufficient equity capital, the Company could potentially be a
giant. Thus, in Dr. Spiro's opinion, J.R. Simplot's balance sheet
is not reflective of the Company's true value. He based his
valuation of the Company using the cash-flow generated but noted
19 According to Dr. Spiro, both companies have substantial
operations in food processing, fertilizers, and crop protection
products, as well as low gross and net margins. In Dr. Spiro's
opinion, because J.R. Simplot Co. is growing faster than ConAgra,
the applicable multiples would be increased.
20 As subsequently discussed, except for a disagreement
about how short-term debt factors into the value, as well as a
minority discount in valuing the Company's Micron Technology
shares, this amount is close to that determined by Mr. Much.
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