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Spreadsheet Supplement for case 298166.

Spreadsheet Supplement for case 298165

Spreadsheet Supplement for case 298166

The credit department of Wiegandt, a furniture manufacturer, is evaluating the financial condition of two stores that retail the company's furniture.

Dixon Corp.faces the task of valuing a plant and an associated project that it is considering buying. The revisions are designed to enable the application of adjusted present value technique for valuation. A rewritten version of an earlier case.

Reviews basic techniques for estimating terminal value in the valuation of businesses. Among the techniques discussed are perpetuities, growing perpetuities, use of multiples, and liquidation value. A rewritten version of an earlier note.

The student's task is to develop a comprehensive strategy for Briggs & Stratton, which is facing severe competition and margin pressures. A major component of the strategy to be considered is whether to implement economic value added (EVA) as a new performance measurement for management. The case is designed to serve as an introduction to how to compute and use EVA. It emphasizes the importance of performance evaluation as part of a larger strategic plan. A teaching note is available to registered faculty, as well as two video supplements to enhance student learning.

Spreadsheet Supplement for case 298139

Spreadsheet Supplement for case 298140

Examines various approaches to measuring mutual fund performance. The approaches include the use of risk exposure and the Sharpe Ratio, as well as the Morningstar star system for rating mutual funds. Applies the approaches to a variety of mutual funds to demonstrate the effect of using different metrics to measure fund performance.

Morningstar, Inc., a publisher of information for mutual fund investors, is considering alternative strategies for broadening its subscriber base and increasing its revenues. Potential strategies include tailoring information for the defined contribution pension fund marketplace, and licensing Morningstar's performance ratings to fund complexes. This case provides a setting in which to discuss the U.S. mutual fund industry, with particular focus on mutual fund performance measurement and the information needs of consumers of mutual funds.

Nancy Featherstone, an account manager with the Royal Bank, was assessing a client request for an expanded operating line of credit. Ashleigh Cosmetics Ltd., a Montreal-based manufacturer and distributor of women's cosmetics, planned to launch a new red lipstick line called Marilyn M. Ashleigh had applied for a $2,000,000 increase in its authorized operating line for a total of $4,500,000. The estimated increase was based partly on anticipated inventory and receivable peak levels for the new product.

Huaneng Power International (HPI), an independent power producer in the People's Republic of China (PRC), is in the process of executing a global equity issue to raise funds for the construction of new power plants. The company is planning to list the new shares through an American Depositary Receipt program on the New York Stock Exchange. The company has recently reduced the price of the issue due to poor market conditions and investor resistance to the price range stated in the preliminary prospectus. HPI's management must decide whether the new offer price and choice of listing exchange is reasonable in light of recent market events and the political, economic, social and technological environment in the PRC.

Wayne Adlam, head of equity capital markets for CIBC Wood Gundy Securities Inc. (Wood Gundy), sat at his desk contemplating placing a value on the equity units of the Legacy Hotels Real Estate Investment Trust. Wood Gundy and RBC Dominion Securities Inc. had been given the mandate to co-lead manage Legacy's Initial Public Offering (IPO). Legacy planned to use the proceeds of its IPO along with funds raised in a concurrent $300 million subordinated debt offering to invest in 11 hotel properties located in major business centres across Canada. The hotel properties would be acquired from CP Hotels.

The president and general manager of Township Motors, a franchised dealership, was considering two proposals for a new body shop facility. He has to decide whether to accept a loan at 15 per cent interest for ten years, or to lease the building and land for a ten-year period, with payment at year end.

This case provides a vehicle for discussing analytical approaches to understanding bidding strategies in a hostile tender offer setting. In 1997, Hilton Hotels Corporation offered to acquire ITT Corporation in an unsolicited tender offer. ITT resisted in several ways. At the date of the case (July 17, 1997), ITT announces a restructuring of the firm aimed at delivering about $70 a share to its shareholders. The task for the student is to understand why Hilton's takeover attempt has failed thus far, and what the possible responses might be at this stage. The case contains a completed valuation analysis of ITT (prepared by the casewriter), which suggests that ITT is worth, at most, $89 a share to Hilton. In preparing a possibly higher bid for the firm, the student must weigh the probability of another bidder's entering the fray and that competitor's bid price. The instructor can use this setting to compare the target shareholders' outlook with the classic "prisoner's dilemma" and to discuss the expected value of not tendering--both concepts are important in devising a bidding response.

Spreadsheet Supplement for case 298116

On October 15, 1996, Virginia-based CSX and Pennsylvania-based Consolidated Rail (Conrail), the first and third largest railroads in the eastern United States, announced their intent to merge in a friendly deal worth $8.3 billion. This deal was part of an industry-wide trend toward consolidation and promised to change the competitive dynamics of the Eastern rail market. Students, as shareholders, must decide whether to tender shares into the front-end of a two-tiered acquisition offer. To make this decision, they must value Conrail as an acquisition target and understand the structure of CSX's offer.

Eight days after CSX announced it was going to buy Consolidated Rail (Conrail) for $88.65 per share, Norfolk Southern made a hostile $100 per share bid for Conrail. Over the next several months, the potential acquirers upped their bids while exchanging criticism in the popular press, prompting analysts to call this one of the nastiest takeover battles of the 1990s. The case is set in January 1997, just before Conrail shareholders are scheduled to vote on the proposed deal with CSX. It analyzes the trend toward consolidation in the U.S. railroad industry, the bidding war for Conrail, and the various provisions in Pennsylvania's anti-takeover laws, which restrict the market for corporate control. It also explores the strategic and financial implications of a bidding war and challenges the assumption that failure to acquire is a zero net present value endeavor. Finally, it examines the nature of and economic basis for regulating the market for corporate control.