Timken Case

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.

Based on the above considerations, the Ke ratio of the merger company will be 11.54%. Furthermore, for the revenue growth and ROE of the merger company, there are more risks than benefits. HP’s revenue may have a recession curve in the short term. Although the merger will bring cost savings of $2.5 billion, HP cannot realize these expected benefits immediately. Other than this, there were questions on the organization culture as well. If HP could not manage its organization properly, integration would only add on to the difficulties. The biggest factor of all is that to integrate the culture existing in the two companies would be a very difficult job. Based on all the considerations, we assume that the revenue growth rate after the merger would be 3.5% and the ROE would be 11%. And as a result, the combined stock price would be 9.0. (See Exhibit 3).

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.

Besides, Timken would use the products of Torrington under the name of Timken’s company and using Torrington’s name as a brand name, resulting in increased range of products. Through this acquisition Timken was able to increase its penetration in global bearing market by 7% to 11%. The Torrington’s sales in 2001 of $1.1 billion will broaden Timken’s portfolio and expand the global size and scope of business.

Below are the FCF estimates relevant to the merger of ITT from Hilton 's perspective, and a sensitivity analysis based on possible discount rates:

Question 1 Several factors have been proposed as providing a rationale for mergers. Among the more prominent ones are (1) tax considerations, (2) diversification, (3)

Harris estimates that the merger will create synergies by cutting costs in a range of $100 million to $120 million. Most of the savings are expected from merging headquarters and eliminating public company costs and from operational and functional

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.

A good measure of evaluating the financial performance of a merger is to analyze the internal rate of return (IRR). “IRR, is also a discounted cash flow method that takes all incoming and outgoing cash into account over the life of the equipment (or the project)” (Baker, 2014). In this case instead of a project, it would be analyzing a merger. When formulating the IRR we will accept any merger when the IRR equals or is greater than the organization’s cost of capital.

Despite the fact that FDA has gone through an arduous approval process, uncertainty about newly approved drugs always exists. This ambiguity is amplified when drugs are approved on preliminary or interim evidence that is accelerated approval or on alternate outcomes and when new serious harms emerge. The case of Tysabri, a multiple sclerosis drug that received accelerated approval because of the ensuring preliminary evidence, this was quickly withdrawn from the market several months later after the advent of an unexpected, typically fatal harm, progressive multifocal leukoencephalopathy, and was subsequently remarketed with a risk management plan that illustrates many of these uncertainties. This led to quantifying the extent of the media coverage

In the fast consumption or food industry, it is essential to understand the internal factor (strength, weakness) and external counterpart (opportunity and thread). As salmon have a large number of substitute, the manager must predict the trend and come with a future strategy which deal with all of the issue that affects the chain negatively.

This finance simulation is based on the simulation for the merger & acquisition deal to value the M&A activity that occurs in 2003 between Blackstone and Celanese. This case study is meant to provide the deal details from the point of view of the Blackstone.

The Timken Company – a leader in the bearing industry, is considering acquiring the Torrington Company from Ingersoll-Rand. Torrington – an engineering solutions segment of the Ingersoll-Rand. The main motive of acquisition is to enhance Timken’s market share and product base. Operating synergies are highly expected from this merger with 80 million cost savings by the end of 2007.

We valued the company using four different methods; Net Present Value, Internal Rate of Return, Modified Internal Rate of Return and Profitability Index. We began with the Net Present Value, or NPV, calculation. NPV values an investment’s profitability based on the projected future cash inflows and outflows of the investment, discounted back to present value using the WACC. The calculations for NPV are presented in Appendix 2. We started by separating cash inflows and outflows by each year. We used Bob Prescott’s estimates for the revenue per year and related operating costs of cost of goods sold as

KONE Aufzug is a new elevator business which is in the middle of planning the launch of their new product, “MonoSpace”, into Germany. KONE is challenged with the problem of how they should price and market the MonoSpace elevator without dismantling and destroying their existing product line. KONE knows that they can only market to low & mid-rise buildings of 12 floors or less due to its cabin requirements and operating speed; however the underlying problem of how to do a successful launch is a question Raimo Hätälä wishes to answer.