Airtread Case Writeup

Maverick Capital is a traditional hedge fund and seeks to reduce exposure to the market by offsetting long equity positions with short equity positions. In contrast, many hedge funds do

The case stated that the purchases were forecast to be $2.7 million. Since level production would require equal purchases for each month, we divided total purchased by 12 months to determine the monthly accounts payable. Next, we added the accounts payable, notes payable, interest payable, accrued taxes, long-term debt, and shareholder's equity. This summation gives us the total liabilities and equity.

For instance, Canada's federal government has delegated the responsibility for airports to local authorities. As a result, many Canadian airports have transformed into brighter, cleaner, and more modern facilities that have become more expensive to operate 3. Canada’s airports have spent more than $9.5 billion on improvements since 19922. According to the CEO of Transat A.T. Inc, “it costs three times as much for an airline to land in Pearson Airport in Toronto as at Charles-de-Gaulle in Paris” 2. Such high landing fees have made Pearson and other major Canadian airports less desirable landing destinations; increasing costs for airlines, and as a result, often increasing prices for consumers. Pearson Airport is West Jet’s “second-largest hub and main connection point in Eastern Canada” and almost half of its destinations are to Canadian airports2, Such high costs of landing in major Canadian cities require that WestJet finds more ways to cut costs and remain the cost leader in its industry.

For g, we are given that the dividend has grown from $0.82 to $1.20 in four years. We use the compound interest formula to get the growth rate

The president and chief executive officer of Sealed Air Corporation, T. J. Dermot Dunphy, explained the firm’s 25% average annual growth in net sales and net earnings from 1971 to 1980: The company’s history has been characterized by technical accomplishment and market leadership. During the last 10 years we built on our development of the first closed-cell, lightweight cushioning material, introduced the first foam-in-place packaging system, and engineered the first complete solar heating system for swimming pools. We intend to follow the same management guidelines in the 1980s. We intend to seek market leadership

First of all, we can estimated what price is competitors are able to pay to acquire AirThread Connections by creating the base-case valuation of AirThread Connections. On the hands, by valuing the upside valuation of AirThread Connections, the estimation of synergies and the suitability of ATC strategic with ACC operations. The steps in valuation of base-case Valuation of AirThread Connections and Upside Valuation of AirThread Connections are identical, the only different is Upside valuation of Airthread Connections included the impact of synergies. The first steps in valuation is to estimate the free cash flows in it's present value. Next is to predict the AirThread Connections operations' terminal value on a going concern basis and treat the company as a perpetuity and then follow by determine the interest tax subsidy in present value. After that by using the equity in earnings of affiliates and Price Earning ratio to calculate the non-operating investments in equity affiliates. The final steps is to calculate the enterprise value in the final valuation and terminal value calculation after valuing the total operating assets in its present value.

After considering the operational improvements forecasted, we project Robertson’s free cash flows and compute the terminal value using the Gordon Growth Method; the implied share price is analyzed further in accordance to growth rate and discount rate.

Analysts estimate that the $80 million in cost saving could be realized after the acquisition , however certain other costs associated with the integration approximately $130 million would occur .Hence, I take these cost savings and integration costs into consideration for the with-synergies valuation. Incorporating the effects of 80million cost savings for the merged firm (to be achieved by end of 2007 and assumed to incur in perpetuity then on) and 130 million integration costs (half of this accounted at the beginning years) in the estimated EBITs for Torrington, a new horizon value is estimated, the new FCF is discounted by acquiring company’s WACC 8.39%. Torrington company’s with- synergies valuation $1386.38 million exceeds the value as a stand-alone entity by approximately $286 million. sheet2: With-synergies Valuation of Torrington-DCF Method.

To calculate estimated growth rate in earnings and dividends for Berkshire Hathaway, we need to look at the historical data for this organization for the last five years. Starting from 2007 to 2011 the net income for Berkshire Hathaway

Airgun Products, Inc. (API) is an air gun retailer that mainly sells directly to consumers. We sold our products through our catalog-based phone order sales channel from 1989 to the mid-1990s. In 1995, we decided to take our sales to the internet and created a website. Our product mix included air rifles, pistols, scopes, mounts, pellets, targets, accessories, and other air gun-related items. The air guns we sell either fire steel or lead BB’s or plastic pellets, which we sell both the firearm and ammunition. Although we have a vast range of 47 different suppliers, we like to conduct business with well-known, reputable firearm suppliers such as Beretta, Crosman, Smith & Wesson, and Winchester. We have accomplished to build great relationships with these credible suppliers by making sure to pay our payables on time.

How has Airborne survived, and recently prospered in its industry? Please address why you think it was difficult for bigger competitors such as FedEx to imitate Airborne’s strategy.

11) In calculating a discount rate for this firm we need to ask “Is it to be cost of debt, cost of equity, or a weighted average of the two in a cost of capital?” The financing for this project is 100% debt so the initial thought is to use cost of debt as the discount rate. However we believe this to not be the correct approach. Debt as at October 30, 1979 (prior to the proposed acquisition) was $1,000,00) while Stockholder’s Equity was $14,718,000. So equity makes up a substantial amount of the

Airline industry has been faced with stiff competition due to the increased number of airline companies in the sector. The study will focus on the strategies that are deployed by Ryanair Airline Company, Air Berlin Company and Easy jet plc in ensuring that it meets with the competitiveness in the economy. The strategies for Ryanair Airline include; Low fare, Best Customer service, Short-haul route and destination, Reduction of operating costs, Internet services in its reservation system and Quality management. In the case of Air Berlin airline its strategies comprises of high service standards, blanket coverage, market

4. Impact of Financing of acquisition: Temporarily increase Debt to capital ratio to 47%. Target debt to capital ratio: 35%

*We calculated the cash flows of the firm and discounted them by our WACC, which was roughly 16%. We used a terminal growth rate of 6% (Exhibit 1)