I'm trying to figure out what would be, after the merge of Player C and D, the increase on the annual EBITDA, if they have the same EBITDA margin of Player A.
Based on the graph:
RMS Player A: 1.3
MS Player A: 1 / (0.4 + 0.5 + 0.6 + 0.8 + 1) = 0.3
MS Player C: 0.6 x 0.3 = 0.18
MS Player D: 0.5 x 0.3 = 0.15
So the merged MS will be 0.18 + 0.15 = 0.33 and is now the new market leader.
That means that the Player A RMS will be 0.3 / 0.33 = 0.9
Merged Player CD will have a new RMS 0.33 / 0.3 = 1.1
The problem that I have is that I don't know how to use the EBITDA % in these calculations.
How can I calculate the annual EBITDA using the EBITDA %?
That way I can calculate Player D with 0.4 RMS and 13%, Player C with 0.6 RMS and 14%, and Player CD with 1.1 RMS and 16%.
I know the answer for Player CD with 16% will be an increase of $2.7M but how can I find that?
And does this increase of $2.7M means that Player A lost $2.7M with their new RMS?
Thanks in advance for any help!