one of the largest cable operators in the U.S., prepared to acquire the AirThread. Connections (ATC), a large regional cellular provider. Although this acquisition. By early , Zimmerman was considering the possibility of acquiring AirThread Connections, one of the largest wireless companies in the United States. This case can be used as a capstone valuation exercise for first-year MBA students in an introductory finance course. A senior associate in the business.
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The acquisition would give American Airthrewd access to wireless technology and the wireless spectrum and enable the company to offer competitive service bundles including wireless, currently a hole in the company’s service offering.
First, American Cable Communication ACC and AirThread could help each other compete in the industry that was moving more and more bundled service offerings. The reasons above make us believe that the synergy is positive and the acquisition is a good idea. He was well aware of several high profile takeovers that ended in either conmections bankruptcy or considerable loss of shareholder value, and overpaying for a target company was one of the quickest ways to achieve disaster.
In order to effectively attract and retain customers, the firm had to offer superior customer yo service and aggressive pricing packages in terms of monthly service fees and equipment subsidies. Zhang believed that the combined company would be able to attract business customers now that wireless, wire line, and internet service could be xirthread by the same provider.
Valuation of AirThread Connections.
Valuation of AirThread Connections | Zakir Pashayev –
System Operating Expenses These competitors included all of the national wireless carriers, which had substantially greater financial, marketing, sales, distribution, and technical resources. Go to advanced search. In contemplating this issue Jennifer believed that it may be necessary to follow the customary practice of employing a private company discount.
Sorry, but downloading is forbidden on this website. Those networks are expected to be able to deliver not only wireless telephony but also internet service with throughput similar to that which is currently offered by cable providers. Log In Sign Up. We assume the equity as the average equity of the industry, which is 0. We are very pleased to receive this award as it means that we are being acknowledged as having made a pedagogical contribution in the area of financial case method.
Finance General Management Marketing. Do 4 A bullet clnnections refers to a single payment to pay off the remaining loan balance at the time of maturity. The smaller companies would eventually be weeded out through industry consolidation. A senior associate in the business development group at American Cable Communications, conhections of the largest cable companies in the U. Besides the three advantages we mentioned before, after calculation, we find that the value of AirThread as a merger target is higher than the stand-alone value of AirThread.
The Cost of Capital for Alternative Investments.
Valuation of AirThread Connections
Most of the national carriers with whom AirThread competed could provide at least two of those services. Erik Stafford and Joel L.
For example, Accounts Receivable We show that the high excess returns to hedge funds and put-writing are consistent with an equilibrium in which a small subset of investors specialize in bearing downside market risks. Leave your email and we will send you an example after 24 hours Sorry, but copying text is forbidden on this website. We choose to change the WACC and growth rate to achieve this because we think those variables are most important. And we use the equity in earnings of affiliates of AirThread to multiple American Cable currently offered video, internet, and landline telephony, but did not have any kind of wireless offerings.
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Gains Losses on Investments A large portion of wireless network operating costs related to moving traffic from cell towers to central switching offices using either landlines leased from competitors or technically cumbersome microwave equipment. Briefly explain your answer. Second, the acquisition could help both companies expand into the business market. All cohnections Reference no. Furthermore, the company believed that its core competency as an acquirer would continue to play a fundamental role in its future success.
Valuation of AirThread op Given the airhhread importance and complexity of a possible AirThread acquisition, Zimmerman decided to tap Jennifer Zhang, an up-and-coming senior associate from the University of Chicago, to conduct the initial valuation of AirThread.
To order copies or request permission to reproduce materials, callwrite Harvard Airturead Publishing, Boston, MAor go to http: The Case Centre is dedicated to advancing the case method worldwide, sharing knowledge, wisdom and experience to inspire and transform business education across the globe. First, American Cable and AirThread could help each other compete in an industry that was moving more and more toward bundled service offerings.
As a result, American Cable became an aggressive acquirer. Heilprin Erik and Joel explain what winning this award means arthread offer some case writing advice.
AirThread Connections Case
Heilprin, Illinois Institute of Technology Finance Professor and Managing Director of 59th Street Partners prepared this case solely as a basis for connsctions discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management.
Consequently, the cash flows were not included in her projections. About the connectiond Erik Stafford is John Alrthread. Click here to sign up.
With the rapidly increasing costs of acquiring new customers and the high penetration rates in video and high speed internet, the group surmised that the only way to achieve meaningful customer growth would be through additional acquisitions. However, unlike ACC, AirThread was feeling the pressure No more immediately in the form of higher customer acquisition and retention costs, plus slower growth. Equity in Earnings of Affiliates Jurek and Erik Stafford.