MGMT E 2720 Mergers and Acquisitions
Supplemental Case Questions
1. The New York Times
a. Why is there so much family control in the newspaper business?
b. How did the Sulzberger family manage to retain control on the NYT after it went public?
c. How does the NYT dual class structure differ from the one used by Dow Jones, prior to its takeover by Rupert Murdoch?
d. What explains the behavior of the NYT institutional shareholders – not just Morgan Stanley but also Private Capital Management, T Rowe Price and Vanguard?
e. How should Arthur Sulzberger, Jr. respond to Morgan Stanley’s proposal?
2. Valuing AOL Merger
a. The Merger was ...view middle of the document...
e. what if anything could management have done?
c. What did Middleby’s Z scores in the late 1990s indicate in terms of trends in the company’s financial performance?
d. Why was the company’s 1998 covenant violation so worrisome?
e. What was the most important part of Bassoul’s five point plan?
f. What else might he have done to improve the company’s fortunes?
g. Why did Bassoul insist on doubling the company’s size through acquisition even as the company completed the final phases of its turnaround effort?
5. Mercury Athletic
a. Is Mercury an appropriate target for AGI? Why or why not?
b. Review the projections by Liedtke. Are they appropriate? How would you recommend modifying them?
c. Estimate the value of Mercury using a discounted cash flow approach and Liedtke’s base case projections.
d. Do you regard the value you obtained as conservative or aggressive? Why?
e. How would you analyze possible synergies or other sources of value not reflected in Liedtke’s base assumption?
a. What is the total enterprise value of Kohler using DCF? What is the value using a multiples approach (Comp value of similar companies)? What is the value of a share held by a minority shareholder that is implied by your valuations?
b. What assumptions can you use to arrive at an approximate share price of $55,400 that was estimated by Kohler? How do these assumptions impact your valuation?
c. What assumptions can you use in arriving at the approximate share value of $273,000 by the dissenting shareholders? How do these assumptions impact your valuation?
d. What is the maximum share price at which Herbert Kohler should be willing to settle with the dissenting shareholders in order to stop the trial on April11, 2007? Assume that (i) if the trial proceeds, it is excepted to last at least one month and to result in one of two possible outcomes in terms of the price per share established in court; the $273,000, being claimed by the plaintiffs, or the $55,400 being defended by Herbert Kohler; (ii) Kohler estimates the probabilities of these two outcomes at 30% and 70% respectively.
a. What did the Rigas family management do wrong? Were any aspects of Adelphia’s corporate governance/ownership structure under the Rigases problematic in your view? Is there anything that concerns you about the Adelphia/Rigas family “co-borrowing” arrangements?
b. If one ignores any alleged frauds by the Rigases, how viable was the Adelphia’s business prior to the bankruptcy filing?
c. Under pressure from Adelphia’s unsecured creditors, new management decided to put the company up for sale rather than pursue a traditional standalone Chapter 11 reorganization plan? Are there reasons why management should reconsider this decision, an in general, what...