Master of the Universe

2786 Words12 Pages
Case Summary Saturn Inc and Venus Inc are two unrelated parties that form Jupiter, a Joint Venture. Saturn contributed $561 million to Jupiter and Venus contributed four manufacturing facilities with assembled workforce, with a total fair value of $539 million to Jupiter. The purpose of Jupiter is to own and operate organic clothing design and manufacturing facilities and sell organic clothing to unrelated retailers. Venus decided to discontinue manufacturing their clothing, but Saturn decided expand its footprint in the manufacturing of children’s clothing. Saturn and Venus received a combination of equity and debt securities for Jupiter. Under Jupiter, Saturn and Venus have the following rights: • The Board of Jupiter (the “Board”) comprises eight individuals, four each from Saturn and Venus. • Both Saturn and Venus are able to nominate individuals for the position of CEO of Jupiter (the “CEO”). • The CEO is responsible for the day-to-day operations of Jupiter. • Most Board actions are passed by a simple majority vote; however, the following actions cannot be taken without unanimous approval of the Board: Appointment and removal of the CEO, Decision to make calls for capital contributions, Admission of new joint venture members, Mergers and acquisitions. • The power to make strategic decisions regarding the operations of Jupiter has been divided between Saturn and Venus. Saturn controls all decisions regarding the design, manufacturing, pricing, and sales of the clothing. Venus controls all decisions regarding distributing clothing in fulfillment of sales negotiated by Saturn on Jupiter’s behalf. Profits and losses of Jupiter are split according to ownership percentage. Issues in the Case The issue in this case was presented when Saturn performed a consolidation analysis and
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