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The value of a firm depends not only on the cash flows it provides to its investors, but also on the timing, as well as the risk of those cash flows. This note focuses on the main methods used to value companies, whether it is in a merger and acquisition setting or not. It covers concepts such as: 1) The discounted cash flow (DCF) method; 2) Discount rates and cost of capital; 3) Valuation using multiples; 4) Value creation through mergers and acquisitions (M&As).

The case is set in February 2006, right after Sonaecom's announcement of its takeover bid for Portugal Telecom (PT) of €9.50 per share. The reader does not yet know how PT will react and whether its management will accept the offer or not. The case recounts this fascinating and intense M&A transaction, taking us through one of the largest takeover bids ever in the European Telecom sector, with a deal value above €15 billion. How will PTs board regard this bid? On the one hand, it represents a 20% premium over the prior stock price. On the other hand, it is a terrible blow to the international aspirations of the PT group. Moreover, the sometimes conflicting views of the general public, the competition regulator, employees and the government have the potential to complicate matters further. Lastly, this deal also has important international implications. One thing is sure. Given all the external pressure, for example from regulators, nothing will be the same for PT or the Sonae Group after this offer. The case serves as a rigorous application of valuation methodology with a focus on understanding the difficulties in forecasting future cash flows and the sensitivity of the valuation analysis to underlying assumptions.

Most management teams are caught off guard when their company becomes the target of a takeover. However, P's management team had seen it all from the other side before and knew just what to do. They viewed this challenge professionally. After declining the €9.50 bid, Portugal Telecoms board formed a special committee to lead the defense strategy. However, the board also confirmed it was not saying no to a deal: We wo't defend at any price. We will do what is right for shareholders, stated Zeinal Bava, P's CFO.

In February 2007, Sonaecom revised their bid to €10.50 per share. Less than one week later, the PT Board wrote to its shareholders maintaining the rejection of this new offer. So far, most shareholders had not manifested their views publicly. PT had been fighting hard for its independence. But would economic conditions be right for Sonaecom's takeover bid to succeed? What would it take to convince shareholders to accept? PT's international roadshow was reaching an end. How would investors react to all this information? Was it time for PT to sit down with Sonaecom?

In March 2007, more than a year after Sonaecom had announced its original takeover bid for Portugal Telecom (PT), things had progressed: new investors had come along, the authorities had approved the deal, both parties were holding roadshows, and finally Sonaecom increased its offer price to€10.50. The day before the final shareholders' meeting (2 March 2007), when the votes would be counted, everyone was doing their own numbers. According to the company's bylaws, votes cast by a single shareholder whose shares exceeded 10% of the share capital would not be counted. Sonaecom's offer was conditional on the removal of this restriction. The removal of this restriction had to be approved by two-thirds of the shareholders present at the AGM. After that, for the offer to be successful, Sonaecom would have to have the support of at least 50.01% of PT's shareholders to its €10.50 per share offer. This was one of the largest deals ever in the Telecoms sector, and investors from around the world were placing their bets on who was going to win the battle.

Case A of this series sets the scene for the largest merger and acquisition (M&A) deal in the telecom industry in Brazil and Latin America. Cases B to F follow on by relating the events up to the deal's conclusion. The sequencing of this story creates a sense of urgency for readers and forces them to take position on different questions at different times. Events began in 2003 when a 50:50 joint venture (JV) between Portugal Telecom (PT) and Spain's Telefónica acquired 60% of Vivo, the leading Brazilian mobile operator. In the subsequent years, Vivo experienced double-digit annual growth, as it reaped the benefits of its own heavy investments and booming consumer demand. In May 2010, Telefónica made a€5.7 billion cash bid for PT's share of the JV. According to Telefónica, this was a full, fair and final offer. How would PT's board regard the bid? On the one hand, it represented a 100% premium on Vivo's pre-announcement stock price. On the other hand, it was a terrible blow to the PT Group's international aspirations. Moreover, the occasionally conflicting views of the general public and the government had the potential to complicate matters further. Lastly, this deal also had important international implications. The case shows how: a) corporate governance practices vary across countries, including environments where there are dual-class shares; and b) the role of corporate governance in ensuring that managers undertake activities that maximize shareholder value as well as serving the needs and strategy of the company. The case also allows for an in-depth analysis of a variety of strategic, organizational, financial and economic issues related to growth strategies through JVs and M&As. The key focus of the case is on the links between finance and strategy.

Case A of this series sets the scene for the largest merger and acquisition (M&A) deal in the telecom industry in Brazil and Latin America. Cases B to F follow on by relating the events up to the deal's conclusion. The sequencing of this story creates a sense of urgency for readers and forces them to take position on different questions at different times. Events began in 2003 when a 50:50 joint venture (JV) between Portugal Telecom (PT) and Spain's Telefónica acquired 60% of Vivo, the leading Brazilian mobile operator. In the subsequent years, Vivo experienced double-digit annual growth, as it reaped the benefits of its own heavy investments and booming consumer demand. In May 2010, Telefónica made a €5.7 billion cash bid for PT's share of the JV. According to Telefónica, this was a full, fair and final offer. How would PT's board regard the bid? On the one hand, it represented a 100% premium on Vivo's pre-announcement stock price. On the other hand, it was a terrible blow to the PT Group's international aspirations. Moreover, the occasionally conflicting views of the general public and the government had the potential to complicate matters further. Lastly, this deal also had important international implications. The case shows how: a) corporate governance practices vary across countries, including environments where there are dual-class shares; and b) the role of corporate governance in ensuring that managers undertake activities that maximize shareholder value as well as serving the needs and strategy of the company. The case also allows for an in-depth analysis of a variety of strategic, organizational, financial and economic issues related to growth strategies through JVs and M&As. The key focus of the case is on the links between finance and strategy.

Case A of this series sets the scene for the largest merger and acquisition (M&A) deal in the telecom industry in Brazil and Latin America. Cases B to F follow on by relating the events up to the deal's conclusion. The sequencing of this story creates a sense of urgency for readers and forces them to take position on different questions at different times. Events began in 2003 when a 50:50 joint venture (JV) between Portugal Telecom (PT) and Spain's Telefónica acquired 60% of Vivo, the leading Brazilian mobile operator. In the subsequent years, Vivo experienced double-digit annual growth, as it reaped the benefits of its own heavy investments and booming consumer demand. In May 2010, Telefónica made a €5.7 billion cash bid for PT's share of the JV. According to Telefónica, this was a full, fair and final offer. How would PT's board regard the bid? On the one hand, it represented a 100% premium on Vivo's pre-announcement stock price. On the other hand, it was a terrible blow to the PT Group's international aspirations. Moreover, the occasionally conflicting views of the general public and the government had the potential to complicate matters further. Lastly, this deal also had important international implications. The case shows how: a) corporate governance practices vary across countries, including environments where there are dual-class shares; and b) the role of corporate governance in ensuring that managers undertake activities that maximize shareholder value as well as serving the needs and strategy of the company. The case also allows for an in-depth analysis of a variety of strategic, organizational, financial and economic issues related to growth strategies through JVs and M&As. The key focus of the case is on the links between finance and strategy.

Case A of this series sets the scene for the largest merger and acquisition (M&A) deal in the telecom industry in Brazil and Latin America. Cases B to F follow on by relating the events up to the deal's conclusion. The sequencing of this story creates a sense of urgency for readers and forces them to take position on different questions at different times. Events began in 2003 when a 50:50 joint venture (JV) between Portugal Telecom (PT) and Spain's Telefónica acquired 60% of Vivo, the leading Brazilian mobile operator. In the subsequent years, Vivo experienced double-digit annual growth, as it reaped the benefits of its own heavy investments and booming consumer demand. In May 2010, Telefónica made a €5.7 billion cash bid for PT's share of the JV. According to Telefónica, this was a full, fair and final offer. How would PT's board regard the bid? On the one hand, it represented a 100% premium on Vivo's pre-announcement stock price. On the other hand, it was a terrible blow to the PT Group's international aspirations. Moreover, the occasionally conflicting views of the general public and the government had the potential to complicate matters further. Lastly, this deal also had important international implications. The case shows how: a) corporate governance practices vary across countries, including environments where there are dual-class shares; and b) the role of corporate governance in ensuring that managers undertake activities that maximize shareholder value as well as serving the needs and strategy of the company. The case also allows for an in-depth analysis of a variety of strategic, organizational, financial and economic issues related to growth strategies through JVs and M&As. The key focus of the case is on the links between finance and strategy.

Case A of this series sets the scene for the largest merger and acquisition (M&A) deal in the telecom industry in Brazil and Latin America. Cases B to F follow on by relating the events up to the deal's conclusion. The sequencing of this story creates a sense of urgency for readers and forces them to take position on different questions at different times. Events began in 2003 when a 50:50 joint venture (JV) between Portugal Telecom (PT) and Spain's Telefónica acquired 60% of Vivo, the leading Brazilian mobile operator. In the subsequent years, Vivo experienced double-digit annual growth, as it reaped the benefits of its own heavy investments and booming consumer demand. In May 2010, Telefónica made a €5.7 billion cash bid for PT's share of the JV. According to Telefónica, this was a full, fair and final offer. How would PT's board regard the bid? On the one hand, it represented a 100% premium on Vivo's pre-announcement stock price. On the other hand, it was a terrible blow to the PT Group's international aspirations. Moreover, the occasionally conflicting views of the general public and the government had the potential to complicate matters further. Lastly, this deal also had important international implications. The case shows how: a) corporate governance practices vary across countries, including environments where there are dual-class shares; and b) the role of corporate governance in ensuring that managers undertake activities that maximize shareholder value as well as serving the needs and strategy of the company. The case also allows for an in-depth analysis of a variety of strategic, organizational, financial and economic issues related to growth strategies through JVs and M&As. The key focus of the case is on the links between finance and strategy.

Case A of this series sets the scene for the largest merger and acquisition (M&A) deal in the telecom industry in Brazil and Latin America. Cases B to F follow on by relating the events up to the deal's conclusion. The sequencing of this story creates a sense of urgency for readers and forces them to take position on different questions at different times. Events began in 2003 when a 50:50 joint venture (JV) between Portugal Telecom (PT) and Spain's Telefónica acquired 60% of Vivo, the leading Brazilian mobile operator. In the subsequent years, Vivo experienced double-digit annual growth, as it reaped the benefits of its own heavy investments and booming consumer demand. In May 2010, Telefónica made a €5.7 billion cash bid for PT's share of the JV. According to Telefónica, this was a full, fair and final offer. How would PT's board regard the bid? On the one hand, it represented a 100% premium on Vivo's pre-announcement stock price. On the other hand, it was a terrible blow to the PT Group's international aspirations. Moreover, the occasionally conflicting views of the general public and the government had the potential to complicate matters further. Lastly, this deal also had important international implications. The case shows how: a) corporate governance practices vary across countries, including environments where there are dual-class shares; and b) the role of corporate governance in ensuring that managers undertake activities that maximize shareholder value as well as serving the needs and strategy of the company. The case also allows for an in-depth analysis of a variety of strategic, organizational, financial and economic issues related to growth strategies through JVs and M&As. The key focus of the case is on the links between finance and strategy.

Global Supply Chain Management is a four-chapter book written by Matt Drake, Director of International Business Programs and Assistant Professor of Supply Chain Management at Duquesne University, and published by Business Expert Press in January of 2012. Written for executives and managers of all levels, the title explores the challenges of managing a global supply chain and discusses what cutting-edge strategies firms can implement to cope with these challenges and improve their supply chain performance. Using case studies to illustrate concepts, the author explores many topics including: supply chain risk management, the total-cost-of-ownership approach to procurement, global supplier selection, network orchestration, transportation and distribution strategies around the world, and transportation security measures. The author opens the first chapter by exploring the concepts underlying supply chain management, terminology specific to the subject, and its evolution relevant to its business functions. The importance of supply chain management to executives and business leaders is discussed and real-world examples to illustrate why and how a firm can derive a competitive edge by managing the supply chain effectively.

Global Supply Chain Management is a four-chapter book written by Matt Drake, Director of International Business Programs and Assistant Professor of Supply Chain Management at Duquesne University, and published by Business Expert Press in January of 2012. Written for executives and managers of all levels, the title explores the challenges of managing a global supply chain and discusses what cutting-edge strategies firms can implement to cope with these challenges and improve their supply chain performance. Using case studies to illustrate concepts, the author explores many topics including: supply chain risk management, the total-cost-of-ownership approach to procurement, global supplier selection, network orchestration, transportation and distribution strategies around the world, and transportation security measures. In the second chapter the author introduces reasons why firms trade globally, the benefits of globalization, and the challenges encountered when a firm is sourcing abroad. The author then discusses the management and mitigation of global supply chain risks as well as strategies for increasing the agility and efficiency of a supply chain. Additionally, he addresses the most pertinent security issues involved when trading internationally; U.S. government security programs are highlighted.

Global Supply Chain Management is a four-chapter book written by Matt Drake, Director of International Business Programs and Assistant Professor of Supply Chain Management at Duquesne University, and published by Business Expert Press in January of 2012. Written for executives and managers of all levels, the title explores the challenges of managing a global supply chain and discusses what cutting-edge strategies firms can implement to cope with these challenges and improve their supply chain performance. Using case studies to illustrate concepts, the author explores many topics including: supply chain risk management, the total-cost-of-ownership approach to procurement, global supplier selection, network orchestration, transportation and distribution strategies around the world, and transportation security measures. In Chapter Three, the author explains key elements that firms must consider when developing a global sourcing strategy. He explores the make-versus-buy decision, global versus local sourcing, and the total cost of ownership. He also discusses methods for selecting, managing, and evaluating successful alliances with international supply chain partners, and he examines innovative supply management relationships developed from the global supply network.

Global Supply Chain Management is a four-chapter book written by Matt Drake, Director of International Business Programs and Assistant Professor of Supply Chain Management at Duquesne University, and published by Business Expert Press in January of 2012. Written for executives and managers of all levels, the title explores the challenges of managing a global supply chain and discusses what cutting-edge strategies firms can implement to cope with these challenges and improve their supply chain performance. Using case studies to illustrate concepts, the author explores many topics including: supply chain risk management, the total-cost-of-ownership approach to procurement, global supplier selection, network orchestration, transportation and distribution strategies around the world, and transportation security measures. Chapter Four discusses the considerations and latest practices that firms implement while venturing into the global marketplace. The author explores strategic options that can improve international operations including exporting, licensing, franchising, joint ventures, and subsidiaries. The importance of transportation infrastructure and its relationship with managing global logistics is discussed in detail, as are international intermediaries that assist with international transportation and documentation processes. Additionally, global warehousing and distribution as well as criteria for establishing efficient global distribution networks are explored.

Corporate Communication: Tactical Guidelines for Strategic Practice is an eight-chapter book written by Michael B. Goodman, Professor and Director of the MA in Corporate Communication at Baruch College, The City University of New York, and Peter B. Hirsch, director of Reputation Risk at Ogilvy Public Relations Worldwide. The title was published by Business Expert Press in January of 2012. Written for both students and business leaders, the text explores the challenges and opportunities in corporate communication posed by a rapidly changing global economy and a revolution in communication channels fueled by the internet. The book focuses on the process of communication in a corporate context, and then explores, analyzes, integrates, and applies the theory, practice, and functions of corporate communication. In the opening chapter, the authors describe the environment surrounding contemporary business and its impact on the transformation in communication practice in small and multinational corporations.

Corporate Communication: Tactical Guidelines for Strategic Practice is an eight-chapter book written by Michael B. Goodman, Professor and Director of the MA in Corporate Communication at Baruch College, The City University of New York, and Peter B. Hirsch, director of Reputation Risk at Ogilvy Public Relations Worldwide. The title was published by Business Expert Press in January of 2012. Written for both students and business leaders, the text explores the challenges and opportunities in corporate communication posed by a rapidly changing global economy and a revolution in communication channels fueled by the internet. The book focuses on the process of communication in a corporate context, and then explores, analyzes, integrates, and applies the theory, practice, and functions of corporate communication. Chapter 2 explores the strategic goals of the communication function in the contemporary corporation. The authors identify the skills that individuals and their companies need to thrive in this environment of constant and rapid change.

Corporate Communication: Tactical Guidelines for Strategic Practice is an eight-chapter book written by Michael B. Goodman, Professor and Director of the MA in Corporate Communication at Baruch College, The City University of New York, and Peter B. Hirsch, director of Reputation Risk at Ogilvy Public Relations Worldwide. The title was published by Business Expert Press in January of 2012. Written for both students and business leaders, the text explores the challenges and opportunities in corporate communication posed by a rapidly changing global economy and a revolution in communication channels fueled by the internet. The book focuses on the process of communication in a corporate context, and then explores, analyzes, integrates, and applies the theory, practice, and functions of corporate communication. Chapter 3 outlines the major forces that have transformed the discipline of corporate communication, and discusses the essential traits and characteristics of successful chief communication officers. The authors provide lessons for the future by connecting current practice with the history of communication in corporations.

Corporate Communication: Tactical Guidelines for Strategic Practice is an eight-chapter book written by Michael B. Goodman, Professor and Director of the MA in Corporate Communication at Baruch College, The City University of New York, and Peter B. Hirsch, director of Reputation Risk at Ogilvy Public Relations Worldwide. The title was published by Business Expert Press in January of 2012. Written for both students and business leaders, the text explores the challenges and opportunities in corporate communication posed by a rapidly changing global economy and a revolution in communication channels fueled by the internet. The book focuses on the process of communication in a corporate context, and then explores, analyzes, integrates, and applies the theory, practice, and functions of corporate communication. Chapter 4 offers two workshops in strategic planning designed to provide the reader with a clearer understanding of the alignment of corporate communication strategy with performance. The exercises emphasize the leadership role of corporate communicators by allowing participants to experience the range of responsibility and activity in the field.

Corporate Communication: Tactical Guidelines for Strategic Practice is an eight-chapter book written by Michael B. Goodman, Professor and Director of the MA in Corporate Communication at Baruch College, The City University of New York, and Peter B. Hirsch, director of Reputation Risk at Ogilvy Public Relations Worldwide. The title was published by Business Expert Press in January of 2012. Written for both students and business leaders, the text explores the challenges and opportunities in corporate communication posed by a rapidly changing global economy and a revolution in communication channels fueled by the internet. The book focuses on the process of communication in a corporate context, and then explores, analyzes, integrates, and applies the theory, practice, and functions of corporate communication. Chapter 5 discusses the internal communication tools and techniques used at the corporate level. Five major corporate communication practices are discussed in detail: strategy and policy, corporate culture, employee engagement, global and affiliate relations, and social media and corporate blogging.