(Hints: Slide #17.) b. Velcro Saddles decides to issue new shares to acquire all shares of Pogo at a 1:3 conversion ratio. What is the value of the stock in the merged company held by the original Pogo shareholders? c. How much gains go to the target? d. How much gains go to the acquirer under the stock offer?
CSX is interested in Conrail for a couple of reasons. Primarily, CSX would like to acquire Conrail because its routes are complementary to their own, allowing the combined company to provide “long-haul, contiguous, and therefore low-cost service between the Southern, Eastern, and Mid-Western parts of the United States.” Additionally, CSX’s acquisition of Conrail would prevent the company’s main competitor Norfolk Southern from gaining access to routes in the Northeastern United States. This would leave Norfolk Southern at a large strategic disadvantage. Lastly, the combination would provide cost synergies and reductions, even on the shorter haul trips, that would far exceed those of Norfolk Southern in aggregate measures. Contrarily, it was also suggested by an analyst that the merger was a result of fear.
By comparing the operating ratios of CSX, Conrail and Norfolk, provided in Exhibit 1 of the case text, it is evident that CSX and Norfolk have low operating expenses as compared to Conrail which means they have higher operating margin and hence are more efficient. One could argue that CSX and Norfolk are able to realize these higher operating efficiencies due to synergies between diversified businesses each of them own. This can be seen by comparing Conrail, CSX and Norfolk’s compounded average growth rate of the component of revenue coming from railways (See Exhibit 5 Case Text) which is found to be higher for Conrail out of the three (See Exhibit A of Report) and so Norfolk and CSX can benefit from potential synergy in railways division by acquiring Conrail. CSX and Norfolk are also significantly less levered and can issue more
This was of obvious importance because they had more citizens to defend their side of the war. The North’s population totaled to a rounded estimation of 22 million people, while the South only had the quivering 9 million. Another important advantage of the Union included the fact that they had 70% of the nation’s railroads. This was hugely beneficial because railroad, at the time, was the fastest means of transportation. This transportation could have easily included people, but more importantly: weapons.
Point #2: Tariffs protect American jobs and wages. (Points: 13) I find this position to be valid. Protective tariffs are designed to raise the retail price of imported products so that domestic goods are more competitively priced (Nickels, McHugh & McHugh, 2008, p. 76). Therefore, if products are competitively priced then the consumer will be more likely to purchase domestic products instead of imports. Since consumers will be more likely to support American vendors, this will keep the American businesses running and not force them to cut costs to compete with imports.
The banks require USG to lock in fixed rates for four years for 75% of the principal. There were also some operating restructuring, including discontinuation of products and distribution channels that failed to meet requirements, layoffs and early retirements. Meanwhile, Desert Partners attempted to acquire USG that they indicated a willingness to increase their bid to $50.00 or more per share in cash for 72% of the shares. Shareholders had to decide whether to wait and vote for the proposed restructuring or tender their shares to Desert Partners. Our recommendation is to reject Desert Partner’s tender offer, and to implement the leveraged recapitalization.
A US multinational company is required to report its financial results in US dollars. How does this create currency exchange risk for the company? What is the term which most accurately describes this particular risk? 4. Identify and describe the ways in which a US company can participate in international commerce.
I feel like the price was a little high given the status of PacifiCorp, but then again PacifiCorp was the leading producer and distributor of low-cost energy to millions of customers across 6 states, and they were exactly what Berkshire Hathaway was looking to invest in, and at the time I believe that Buffet was getting anxious to invest in something to keep up his promise of a 24% annual growth rate, so maybe the bid price could have been a little higher. 3) How did Berkshire’s offer measure up against the company’s valuation implied by the multiples for comparable firms? In Exhibit 10 it shows that PacifiCorp’s book value was above the mean and median of comparable firms so the company’s business financials were in order, but also in Exhibit 9 it shows that PacifiCorp had a large amount of debt compared to other regulated Energy Firms. Buffet believes
My Recommendation: Whelan should manufacture Varex in Continental Europe. Supporting Arguments: • The price negotiations with the continental Europe partners has been done successfully and is likely to have a salubrious effect on net income. • The strategic objectives of the company are likely to be achieved by locating the manufacturing facility in Europe since Europe remains the largest market as well as the fastest market for the company's products and the market is growing faster than the US market. • A strong move to remove double taxation in the Europe. • Europe headquarters in Switzerland has $200 million in cash, which can gainfully be used to set up the manufacturing facility.
Problem 1 The merger transaction was designed with a degree of complexity to offer best possible financial structure that benefits the companies. Essentially it was more like merger than an acquisition as the two companies sought mutual advantages by combining the two companies. Therefore there was enough room for the two companies to cooperate in negotiations, to make the best deal out that gives enough flexibility and investment options for companies and their shareholders. At the end of the transaction, Rhone-Poulenc obtained 68% of Rorer's common stock (91.6million shares), which allowed Rhone-Poulenc to consolidate Rorer's results for financial reporting. The transaction was structured into three stages as following: 1.