Midland Energy Essay

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Managerial Finance Thomas Carroll Office Hours: By Appointment on Day of Class Case-Study Questions Valuation In Practice: Public Traded Company Radio One, Inc. Radio One (NYSE: ROIA and RIOAK), the largest radio group targeting African-Americans in the country, had the opportunity to acquire 12 urban stations in the top 50 markets from Clear Channel Communications, Inc. (NYSE: CCU) in the winter of 2000. The stations were being sold by Clear Channel Communications, Inc. to obtain Federal Communications Commission (FCC) approval for its acquisition of AMFM, Inc. (NYSE: AFM). Radio One was also negotiating the acquisition of nine stations in Charlotte, North Carolina, Augusta, Georgia, and Indianapolis, Indiana. The proposed acquisitions would double the size of Radio One. The case focuses on the strategic and financial evaluation of the proposed acquisitions. The case provides the opportunity to forecast the cash flows associated with the proposed acquisitions and to value those projections using discounted cash flows methods as well as transaction and trading multiples. You can find the data for this case on the course website in a spreadsheet named: Radio One Exhibits.xls. Phone: Campus Phone tcarroll@depaul.edu 1. Why does Radio One want to acquire 12 urban stations from Clear Channel Communications in the top 50 markets along with the nine stations in Charlotte, NC, Augusta, GA and Indianapolis, ID? What are the benefits and risks? [HINT: Be clear and concise. You should not spend more than 2 paragraphs in answering this question.] 2. What price should Radio One offer based on a discounted cash flow analysis? Are the cash flow projections reasonable? To answer this question I will expect a quantitative and detailed analysis to the following parts of the valuation: a. Projected cash flows. b. Projected capital expenditures and changes in working capital. c.

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