Introduction Our case study titled, The AT&T and McCaw merger negotiation, provides us with an opportunity to negotiate the terms of the merger between McCaw cellular and AT&T. McCaw was the largest competitor in the rapidly growing cellular telephone communications industry. AT&T was the dominant competitor in long-distance telephone communications in the United States, and one of the largest corporations. Prior to the negotiations, it had no position in cellular communications. Brief Insight: McCaw Cellular Communications McCaw Cellular was a Kirkland, Washington-based wireless provider operating in the largest urban areas under the name Cellular One. McCaw had been one of the first to recognize that cellular (or wireless) …show more content…
• Regulators prohibit transactions between At&T’s equipment subsidiary and McCaw minimizing the potential for synergies between the two affiliates. • Regulators prohibit joint marketing of AT&T long distance service and McCaw’s cellular service. • Regulators prohibit entry into other related markets such as PCS or local telephone service in return for letting the acquisition go through. McCaw’s Operational Risks • AT&T wants to grow the business in a slow, orderly fashion. • McCaw’s employees don’t fit well within AT&T operations, both culturally and technically. • McCaw’s network is at full capacity in all markets, requiring AT&T to upgrade all of McCaw’s markets at the same time. VALUATION Current market prices: Both McCaw and AT&T’s common shares are publicly traded. The market value of the equity can be summed with the book value of debt to give a rough estimate of the firm’s current value. The calculation that follows suggests a value for McCaw’s assets of about $10.5 billion. McCaw’s shares may be trading at a minority discount, because the CEO holds a controlling block of shares. To purchase a partial
As for this case, we decided to address the companies that were 2 most similar in size to MCC and that were most recent since the industry is rapidly evolving, and therefore, valuations are also rapidly changing. Discounted Cash Flow Analysis Finally,
One of the major risks facing Telco is their CEO is 70 years old and his son being the CTO could give rise to a conflict of interest. Bryant Dunetz had agreed to step down and allow Valhalla to search for a new CEO. This could be a risky endeavor because Dunetz may either refuse to step down after negotiations or the new CEO may not be a good fit. The other two major risk factors is they do not have a strong executive management team and their competition in this market space is ramping up and soon they will not be the top solutions provider for large corporate telecom equipment and services. With Valhalla having only 25% of the voting rights in the company after the capital issue, they may not have the ability to force their way with the future management. Meanwhile the average time of determining success of a venture capital investment is 18 months. Replacing the entire management team and vetting that process out would take up a significant chunk of that time. Lastly, Valhalla does have to move quickly to get Telco the capital they need to gain as much market share as quickly as possible. The
In last 10 years there has been a major emergence of a company called XM / Sirius Satellite radio. When fellow competitors XM Radio and Sirius Satellite Radio announced plans for a merger in 2007, most thought that an answer from the FCC would be coming the usual window of six months, allowing for a smooth transition of these two companies. Ignoring a self-imposed rule to handle such cases in 6 months of less, FCC Chairman Kevin Martin chairman withheld the verdict for approximately 17 months as his FCC debated the antitrust issues between Sirius and XM. Briefs were submitted by the Justice Department, individual citizens, and traditional radio broadcasters, arguing that the XM-Sirius merger should have been prevented over antitrust concerns. Ultimately, the Justice Department, and then the FCC, on a 3-2 vote, approved the merger in 2008. This paper seeks to discuss merger and antitrust positions concerning Sirius XM by starting with a history of each individual company, explaining the relevant business law topics and opponents’/proponents’ arguments, and highlighting the post-merger financial success of the combined company.
Please see Exhibit 1 and Exhibit 2 MCI’s external needs will keep increasing over the next few years as the operating margins would shrink because of higher competition & higher access charges. In order to increase its market share, MCI would need to continue investing huge capitals in its network. As per exhibit 9 of the case, it is anticipated that MCI will
The federal government has recently filed a lawsuit against AT&T and Time warner for trying to vertically merge together. The reason why the government is filing a lawsuit against the merge is that AT&T- Time Warmer will be able to demand higher prices for consumers to receive networks such as TNT, TBS, and CNN. AT&T makes the argument that this vertical merge has earned the green light from the government in the past. For example, in 2011 when NBC and Universal merged together as a vertical merge the government approved it but the Justice Department and the FCC set a variety of conditions in order to approve the vertical merge between the companies. The DOJ also argues that by completing this merge the companies will raise cost to consumers
If they are able to maintain the loyalty of most of their current customers, the companies will then have a shared amount of about 100 million customers. This potential customer volume for the merging companies would greatly outnumber the customer volume of the industry leaders, AT&T and Verizon. This kind of turnout would create greater competition between the two merging companies and the two leading companies (Sprint Wireless News, 2014). Although the outcomes seem promising for Sprint and T-Mobile, there are also potential negative effects of a merger that the companies should take into consideration. Current Sprint and T-Mobile customers have expressed their fear of the possible merger for multiple reasons. The two biggest worries for telecommunication services consumers is the potential for rising costs and a reduction in provider options (John, 2016). In making a final decision, the companies, as well as the Federal Communications Commission, should weigh the advantages and disadvantages of a
The company widely covers most of the territories in United States but its telecommunication services are not being expanded globally in other parts of the world in comparison to its competitors (marketing).
You would not buy a home, car or other large purchases without researching what product offered you the most for your money. The same is true when investing in a company. Investors do avid research on multiple companies to find what company matches the investors' criteria. In this paper Team C will research both AT&T and Verizon's financial documents. Team C will compare selected ratios, cash flow and make recommendations how both companies can manage cash flow for the future.
If the company is subject to stringent regulation by federal, state and local governments, which regularly regulate the video services, internet service and VoIP digital phone service industries. Then, Comcast's businesses, including Cable and NBCUniversal's businesses are required to comply to the regulation by federal, state, local and foreign authorities under applicable laws and regulations, and under agreements it enters into with franchising authorities.
The FCC’s move will allow companies like Comcast, AT&T and Verizon to charge internet companies for speedier access to consumers and to block outside services they don’t like. The change also axes a host of consumer protections, including privacy requirements and rules barring unfair practices that gave consumers an avenue to pursue complaints about price gouging.
HP entered into an agreement with Compaq Computer Corporation in September 2001. In this definitive agreement, HP is going to purchase all of Compaq’s common shares outstanding, and pay a total price of 0.6325 shares of its common stock for each share of Compaq’s common stock.
In a $35 billion deal, Sprint Nextel prides itself on being able to provide innovative services and technology to a wide range of consumers, business associates, and government officials. Although Mr. Forsee has said, “This merger positions Sprint Nextel for greater success than either company could have achieved alone," there are many obstacles that Sprint Nextel must overcome in order to become the leading cell phone network provider. First, one must examine the problems with Sprint and Nextel before the merger.
Honeywell is a leading supplier of engine starters (upstream) where its inputs are necessary for the production of engines that GE (downstream) produces. GE’s CEO, Jack Welch strongly believed the
Manufacturing plants and labor had to be reassigned to better suit the new company’s goals and budget. 3G Capital has been known for its ruthless measures in cost-cutting. Soon after the merger, the company announced that production would be consolidated and as a result, 7 plants would be shut down. This meant that several thousand employees had to be let go. It wasn’t a number that could be ignored by the cities. In turn, states and labor unions tried to strike a deal with the company by offering incentives for
AT&T Inc. is the largest provider of wireless telecommunication services in the united states of fixed telephone and the second largest of mobile telephones. This makes the company, a multinational telecommunication corporation in the USA.