Ann: Impact on BKW of SOL announcement, page-29

I used to do my head in trying to work out the cross ownership and the correct way to value SOL and BKW. I'll paste calculations I posted in 2018 on HC but...

Essentially if company A consists of $100 in cash and company B consists of $100 in cash, then if the two companies merged company AB would consist of $200 cash.

If each had a 50% interest in the other you could not simply say company A is now worth $150 and company B is worth $150 because if they merged they would only have a combined worth of $200 not $300.

To solve the problem requires complicated maths involving simultaneous equations - I went through it in 2018 using figures current at the time which I have pasted below..



(FROM 2018)
I've just gone over this with a VCE maths student, so here goes!

BKW = Property + Building + 0.47SOL

SOL = Investments + 0.44BKW

Putting some guesstimates in the equation...

BKW property is worth 750m and building products about 350m

SOL's investments other than BKW are worth about 4400m

BKW = 750 + 350 + 0.47 SOL

SOL = 4400 + 0.44BKW

Using the scientific calculator...

BKW = 3994m (Current MC = 2448m)

SOL = 6157m (Current MC = 6600m)

Now,

BKW = 3994m = 750 + 350 + (0.47 x 6157)

and

SOL = 6157m = 4400 + (0.44 x 3994)

Which suggests to me that if SOL's MC at 6600m is reasonable then BKW is seriously undervalued...

(BKW MC today is $3849m and SOL MC today is $9528m)