MSc in Corporate Finance: Advanced Corporate Finance Denys La Tour Xinyi Pei Paul Michel Jean-Cyril Vaissié Alice Lamberton Professor: Florencio Lopez de Silanes Molina 2/7/2012 Denys La Tour Xinyi Pei Paul Michel Jean-Cyril Vaissié Alice Lamberton AGENDA: Case overview | Japanese corporate governance vs U.S. corporate governance | Foreign investors motivations and shareholders rights in the law | Shareholders rights and dividends policy | Self-dealing and organization in Keiretsu and shareholders control of the accounts | Take over of Koito, implication (about its activities with Toyota) and large shareholders in corporate governance | What really happened | 1 2/7/2012 CASE OVERVIEW: CASE OVERVIEW: Pickens bought 20.2% of the Koito shares (undisclosed seller and amount) The board refused an increase of dividends, but accpeted it after Koito rejected the demand of Pickens to review the accounts. Pickens and Koito launched publicity campaigns against each other. Sep 20 Mar 9 Jun 27 Mar 30 1989 1990 Jan 15 Mr Watanabe, tried to oblige Toyota to buyback his Koito shares. Toyota did not oblige. Hence, Mr Watanabe opened discussion with Mr. Pickens from the U.S.
2. What were T. Boone Pickens’ motives when he bought the share? As the largest shareholder of Koito Manufacturing, is he entitled to representation on the board, does Japanese law allow for that? If not what in the law could he use to get an equivalent result? What were T. Boone Pickens’ motives when he bought the share?
2) The sales budget calculates how much the company will spend to produce the required number of units. The president should do further consideration in terms of capital and labor costs. Does company have an adequate capital to produce the required number of units? And if the answer is no, they should look for other alternatives such as borrowing and others. 3) The sales budget is to estimate the profitability.
Other capital re-organizations alternatives involve significant tax liability and considering the present state with Seagate being a public company, tax liability will result in loss of wealth for the shareholders since it involves corporate taxes as well as personal tax liability. The stock of Seagate Inc., is experiencing an adverse value gap such that the market value of the corporation is significantly lower than the asset value. The management have evaluated different options to re-state the stock price to represent the fair value of the group. These includes divestment, discontinue and other capital restructuring strategies resulting in considering an eventual swap with VERITAS Ltd. stock for Network and Storage Management Group. Seagate management have a fiduciary duty to protect the wealth of shareholders and ensure a fair offer tendering hence they have narrowed down to opt for this two-staged LBO transaction.
On what key assumptions should the management based their decision either to purchase the SCC or not? If the management decide to acquire SC, to what key considerations should the President devote his attention in order to make the acquisition an economic success and lastly how appropriate is BF’s hurdle rate of 12% for existing projects. The methodology adopted in carrying out this assignments include among others, checking the company’s background in terms of its acquisition strategy over time and its unique niche in acquiring Southern Comfort Corporation, analyzing the effect of Brown-Forman’s market strategy on the law of demand and supply in a slow market, carrying out swot analysis on the corporation and detailed interpretation of the available of financial data to determine the viability of the proposed acquisition. The limitation encountered is lack of relevant figures to be able to perform a net present value assessment on Southern Comfort. Also looking at the value of the investment over time with the repayment of the loan and the increase in capital value, it is
Is the real estate subsidiary a good idea? If the managers buy more stock, what is the appropriate price? There are two major concerns which are gaining competitive advantage and determining comparable valuations. Brazos should allow the company to sell the managers some stock of the business to benefit the managers. But the amount that a manager can hold stocks should be limited because the ownership would be split in this way as it is not good for Brazos itself to decrease its ownership.
1. Is it ethical for a CPA or CPA firm to help companies “manage” their reported earnings and financial condition? First assume that the CPA or CPA firm is serving as a consultant, and then assume that the CPA or CPA firm is serving as the given entity’s independent auditor. Defend your answers. In my opinion, it is not ethical for a CPA or CPA firm to help companies “manage” their reported earnings and financial condition.
Voodoo Anyone? Christopher Warden breaks down economics into a fool proof explanation, and uses terms references which a dummy could understand. As I read this informative book I gathered an understanding for the way in which our economy works, as well as the unseen ways in which our government handles the issues that affect our everyday life. In the first chapter, the author discusses what prices are the difference between the price of things, and the cost of things. He breaks down what the stores charge us in order to sell the product at a price we will pay, so the store can still make a profit on the item.
What are the key assumptions that especially influence WACC? 5. What are the free cash flows of the packaging machine investment? Should Koh approve the investment? Management Summary Financial Health The financial health or strength of a company is measured by its ability to service its financial obligations senior to the common shareholders.
These days the way managers operate and strategize their business policies has taken a stance against the previous operational strategy that a business exists only to make profit without any consideration or regards to anything else in the world as said by the economist Milton Friedman in his essay “deriding the idea that a business had any responsibility other than to maximise its profits within legally and ethically acceptable margins, arguing that ‘a corporate executive is an employee of the owners of the business. A few new theories were introduced in the famous essay written