The Timken Company Case Study

This memo will examine Timken Company's decision to acquire Torrington by examining the stand-alone value of Torrington, the synergies of this acquisition and the effect on Timken's investment grading.

Depending on the execution and implementation of an expansion and its success rates, shares could go up or down in value accordingly, which then effects the companies’ shareholders.

The company position is strong enough so its better that company should use debt financing instead of equity financing.

For the corporation that has acquired another company, merged with another company, or been acquired by another company, evaluate the strategy that led to the merger or acquisition to determine whether or not this merger or acquisition was a wise choice. Justify your opinion.

Globalization is a process of increasing interactions between companies and countries around the world with less difficulty (Sexty, 2013). Tim Hortons operates mainly in Canada; however, it has expanded over the years to various locations across the world. As of December 31, 2016, there was a total of 4,613 restaurants in nine countries with more than 100,000 employees. Outside of Canada, Tim Hortons is prevalent in the United States, as well as middle eastern countries, such as the Gulf Cooperation Council, Asia, and Europe. Collectively, there are over 4,500 distribution outlets on a worldwide scale. In Canada, Tim Hortons dominates the coffee industry with eight out of every 10 cups of coffee sold in Canada being from them. In addition, Tim Hortons remains perched at the top of Canada’s fast food market, generating a staggering 25% of all fast food revenue in Canada. A powerhouse in Canada, Tim Hortons has outsold every other fast food restaurant, including McDonald’s.

Please answer the questions posed at the end of each case study in essay form.  Each essay will be judged on your capacity to present strong, logical discussions that support your conclusions.

With this acquisition, Timken could break into and dominate the European market and use it as the leverage to be the leader in bearing industry.

From our DCF calculations, the value of Torrington as a stand-alone entity is $1.181 billion. However, the maximum purchase price for Torrington should only be $641 million. The optimum debt amount for this transaction would be $301 million. This amount of debt would result in a total debt to capital ratio for Torrington of 47%, within the range for a BBB “investment grade” debt rating. The combined entities, Torrington-Timken, would produce an interest coverage ratio of 3.2, and a debt ratio of 45%, again within the range for a BBB “debt rating. The purchase would likely be a cash transaction.

Reflecting on this particular case study, the group consisted of four individuals, they were John Crumpton, Lonnie Griffin, Rosa McAllister-McRae, and Jonathan Wirt. Since Griffin already has a working relationship with Hercules Steel Industry, he suggested that the group research the Industry as its case study. The group completed preliminary research on Hercules Steel, and decided to accept Griffin’s suggestion. Based on the preliminary research, the company would be a good fit for the group’s project. However, the group had not yet received approval to research Hercules Steel, however once they received approval to move forward in completing a case study with Hercules Steel, the group began the assignment. The entire group was excited

The competitive priorities both in Timbuk2’s San Francisco and China business headquarters are both the same in the respect that they are trying to

a. Diagnose the underlying causes of the difficulties that the JITD program was created to solve. What are the benefits of this program?

Rob Honeycutt began Timbuk2 in San Francisco, California in 1989. The bicycle messenger wanted to create a bag that was durable but stylish enough to be marketable. He used an old sewing machine to make a bag different from the traditional back pack. He is asked about these handlebar bags by other people while he is still working as a messenger. With an investment of two hundred dollars, he buys fabric and fasteners. He makes fifty bags and sells them to a local bike shop (Caltani, 2011). His company Scumbags or Timbuk2, as it is currently called, is born.

From the above SWOT analysis we can see that the company faced challenges due to its weaknesses (Danca). Templeton was failed to manage the existing employee of the acquired companies and unable to formed right strategy due to lack of research data and information.

This type of pricing gives customers a good deal and encourages them to buy more which saves on packaging in which seller gives quantity discount. In this case the bundle of 5 T-shirts s priced lower than the sum of the price of individual T-shirt. This type of pricing is based on the demand schedule where customers may have high willingness to pay for T-shirt but not for 5 T-shirts, and the pricing discount is to match customer willingness to pay. 5 T-shirts are packed for one price using a bundling pricing which is a second-degree price discrimination that used to extract consumer surplus. This is an example of a promotional bundle in the mixed bundling category in which the bundled price of the 5-Tshirt is lower than the total price of individual product price added together. The consumers have the choice of buying packs of 5 T-shirts or buying a T-shirt without the pack. In this pricing strategy identical T-shirts are packaged together in order to enhance profits by forcing customers to make an all decision. The mixed bundling pricing provides a means by which the company can get the consumer to pay the full value of the 5 units of packaging 5 T-shirt a product and selling them as one package, the company can earn more than selling per T-shirt price. The profit maximizing price is the 5 T-shirt for $10 on a pack is the total value the consumer receives for the package, including consumer surplus and business could enhance profits even consumers have identical demands.

In this case analysis I will discuss the strategies my group, the suppliers, took, the results of our meeting with management, the strategies and results of other stakeholders meetings with management, the positive and negative response to power plays and what I would do differently in retrospect.