Interco | | | | | | | | Formerly a footwear manufacturing company, Interco developed into a diversified company that comprised subsidiary corporations in four major business areas: apparel manufacturing, general retail merchandising, footwear manufacturing and retailing, and furniture and home furnishings. Due to the fact that Interco 's subsidiaries operated as autonomous units and lacked integration between its operating divisions, the company is particularly vulnerable
HBS Case Study : Interco 9-291-033 HBS Case Study : Interco 9-291-033 * Started out as shoe company – been around a long time * •Business has spread to other consumer products / services through acquisitions * •Fairly conservative financially, debt level is relatively low * Interco has moved away from apparel and general retail (went from 59% to 40% of total sales)• * Placed more emphasis on the footwear division. (acquired Converse in 1986)• * Placed much more emphasis
Interco Case Study Interco’s financial performance was moderately successful for the 1988 fiscal year. Interco’s current ratio (3.6 to 1) and debt-to-capitalization rate (19.3%) indicate that the company is financially flexible. Furthermore, both overall sales and net income increased from the previous year (1987) due largely to the strong performance of Interco’s furniture and footwear divisions. Sales in 1988 increased by 14.7% in the furniture division and 34.2% in the footwear division.
Interpret Interco’s financial performance. Why is Interco the target of a hostile takeover? What are your interpretations of the Board of Directors in case Exhibit 1? As a member of Interco’s board are you persuaded by the premiums paid in case Exhibit 10 or the comparable transactions analysis in case Exhibit 11? Why? Apr. 27 Interco (C) continued: Compute the estimated value of Interco based on instructions in Exhibit 34. Use the 1988 sales data in Exhibits 8 as the foundation for the
signs agreements with Moon-Star Chemical Corp., Mizuno Corp., and Zett Corp. to handle the manufacture, distribution, and sale of Converse footwear in Japan. 1985: Official shoe of National Basketball Association 1994:Converse is spun off from Interco in November. 1996:Converse reaches its 700 million sales of sneakers 1999:Converse introduces the He:01 shoe. 2003:Nike Inc. purchases Converse with 305 million dollar. 2008:Converse promotes “Welcome to Converse Century”. 700 million pairs
____________________________________________________________ ____________________________________________________ Professor Benjamin C. Esty and Jason Auerbach (MBA 1997) prepared this case. This case was developed from published sources and has not been approved by Marvel Entertainment Group. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 1997, 1998, 2007 President