Question 1: Is Congoleum a good LBO candidate? In other words, does this company have a lot of debt capacity?
To judge if a company is a good LBO candidate the following are very important factors: low levels of debt in the target, stable cash flows, excess cash on-hand, assets that can be used as collateral to raise debt and no major capital requirements to keep the business running on an on-going basis. Congoleum is an ideal LBO candidate because:
1. Low level of debt – estimated long term debt is around 15.6 million
2. High asset base with assets worth 323 million
3. Stable cash flows with estimated total revenues increasing from 559.9 million in 1978 to 937.8 million in 1984 (Note also its strong intellectual property as shown by
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Question 2: How can you explain the 50% premium paid to the share-holders of Congoleum?
The 50% premium can be explained by the valuation of the firm based purely on its projected future cash flows and assumed growth rate (value = $391.58 million) plus the added value that the ITS can provide (value = $114.2 million) when the leveraged buyout is completed. There are two components to the ITS or income tax shield –
• Firstly the interest expense incurred from taking on
It is a company with revenue of 52.5 M in 2005 with growth 3 % more than 2004.
A brief history of the Democratic Republic of Congo (DRC) consists of civil war and corruption. In 1960 they achieved Independence, which was followed up by a civil war and a temporary fragmentation of the country. In 1965 Mobutu Sese Seko seized power. Then in 1997 rebels ousted Mobutu and Laurent Kabila becomes president. From 1997 until 2003 there was another civil war, pulling in several surrounding countries (Africa's first world war). From 2003 to 2016 conflict persisted in the east, where there are still armed groups. In 2006 the first free election in four decades took place. Joseph Kabila won the run-off vote. In 2015 at least 30 were killed in protests against proposed changes to the electoral law (AFP). The law was designed to
The acquisition premium is the difference between the actual costs for acquiring a target firm versus the estimate made of its value before the acquisition. On May 1st 2008, FVC’s market value was worth is $39,75 (price close in exhibit 6) x 2.440.000 shares = $
Nevertheless I do not think that this corporate strategy is the best. This strategy is mainly concerned with making choices among the last two alternatives. So the corporation would be constrained to relinquish the enormous promise of African continent, or the 41% of mining profit if it chooses to focus in Lonrho Africa.
The Congo, also known as the Democratic Republic of Congo (DRC) is a county in west central part of Africa and close to the equator. The DRC is one of the poorest countries in the world. Besides the 25 miles of Atlantic Ocean coastline, the country is surrounded by land. The country has 4 main climates regions that have averages temperatures from 60 F degrees up to high 80 F degrees, and average rainfall ranges from 30- 70 inches a year. The country topical geography consists of “large river basin, a major valley, high plateaus, three mountain ranges, and a low coastal plain. Most of the country is composed of the central Congo basin, a vast rolling plain with an average elevation of about 1,700 feet (520 meters) above sea level.” The country
Here is an overview of their net profits and net revenues over the past 3 years;
It is a publicly traded company on the New York Stock Exchange. Financial figures as of 2012 are as follows; revenue was USD 241.909 Billion, operating income of USD 46.332 Billion, net income of USD 26.179 Billion, total assets of USD 232.982 Billion and equity of USD 137.832 Billion.
From continuing operations the Company generated $872.7 million of net operating cash flow prior to interest, tax and material items. we are confident the Company can maintain its strong cash flow in future years.
numbers from the acquisition, as well and performance over the past couple of years. One of the main
Posted more than $4 billion in revenue and $235 million in net income in 2002
Montgomery experienced great prosperity in the1990’s, its revenue leaping more than sevenfold, from $94 million in 1990 to $705 million in 1997. Most of its success came from investing in fast-growing companies.
4. The company has a strong free cash flow at $8.2 billion. (Annual Report, p. 1)
Global company with worldwide sales of $13 billion and $7 billion gross profits for 2009.
They planned to become $1 billion Company by 1988. But then the problem started as they growth rate only 6.7 percent and profits fallen by 30 percent by the end of 1986. The defect level was increasing. In that scenario the revenue became stagnant and profitability started decining.
The company’s revenue grew up $74 million, as at 3.3%, in 2011 compared to the year 2010.