CASE STUDY 1 SEC ENFORCEMENT RELEASE- BRISTOL-MYERS 1. Access the SEC website‚ www.sec.gov‚ and do the following: -go to “Information for Accountants” -go to “The Division of Enforcement Chief Accountants Office” -go to “Accounting and Auditing Enforcement Releases” - then go to the enforcement release related to Bristol-Myers dated August 4‚ 2004. 2. What were the broad areas which the SEC addressed? 3. Of these issues‚ which one was by far the most significant in terms of dollars involved
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Question 1: was infinity a good LBO candidate? On the basis of our analysis set forth below‚ we believe that Infinity Carpets was not a viable LBO candidate. We have answered this question analyzing the various criteria typically looked in a possible LBO scenario‚ where 1 means low risk and 10 means high risk. Criteria Rank Comments Cyclicality/volatility 7 Strong dependence on housing market even though good record during recession (p. 2‚ paragraph 4). Volatility due to exposure to a volatile
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thriving enterprise by 1965‚ when annual sales amounted to about $8 million. The company needed backing to expand‚ however‚ so it sold out to Buffalobased conglomerate Houdaille Industries Inc. Houdaille was in turn purchased in a 1979 leveraged buyout (LBO) led by Kohlberg Kravis Roberts & Co. By 1982‚ when debt‚ competition‚ and a ickly machine-tool market had battered Burgmaster badly‚ Houdaille went
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was a resilient spirit‚ and in the end Okonkwo overcame his sorrow. He had five other sons and he would bring them up in the way of the clan.”(126) When introduced to Western ideas in Things Fall Apart‚ things really did “fall apart”. Some of the lbo people improved from the ideas. But others fell; their leadership fell‚ their respect fell‚ and their manhood fell. Okonkwo was one of the unlucky ones. His sense of identity was completely changed and challenged due to these new
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1. LBO funds have been notably active in the market for mergers and acquisitions (M&A) in recent years. The line between some types of hedge funds and LBO funds blurred in the last few years‚ but most hedge fund strategies remained quite distinct from the LBO investing model. For many years‚ hedge funds active in the distressed arena tried to buy defaulted or near-default bonds and then resell them weeks or months later at a profit. The blurring of the line between LBO and hedge funds began when
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market at an average age of 6.5 years. Different from the normal calculation‚ these disposals represented significant part in Fraikin’s regular operating activities‚ therefore should be included in the calculation of operating value. b. Leverage Buyout (LBO) Leverage buyout was an acquisition of a
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Name Case Number Target HoogenFood N.V. UVA-F1497 Raider Finance Mondiale S.A. UVA-F1498 LBO Sponsor Lanza E Compagnia UVA-F1499 White Knight Alimentos Globales UVA-F1500 Bank Omni Bank PLC UVA-F1501 Bank Euroland Bank A.G. UVA-F1502 Case Structure Euroland Bank Omni Bank Financing Of E2.5b Financing Of E2.5b LBO Raider Tender offer E70/shr Owns 8.3% has E6b capital ??? Target Food Div. Chemical Div. Operates company
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Leveraged Buyout of RJR Nabisco In 1988‚ a war was launched for the control of RJR Nabisco. It ended at the end of the year when KKR won the bidding war with a $ 109 per share offer and took RJR Nabisco private. Before the details of the leveraged buyout (LBO) are discussed‚ it is important to understand what made RJR Nabisco so attractive. RJR Nabisco was a conglomerate company that was involved in mainly two industries. It had divisions in the tobacco and food industries. In the tobacco division‚ RJR
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Submitted by Benjamin T. Schultz‚ Gail Olsen & Raj K Bhutani To Dr. Susan E. Moeller Eastern Michigan University‚ Ypsilanti‚ Michigan Table of Contents I Problem Statement 3 II Analysis of Economic and Industry Data 3 II.1 What is LBO? 3 II.2 RJR and Smoking 3 III Analysis of Alternative Solutions 4 III.1 Strengths of KKR: 4 III.2 Weaknesses of KKR 5 III.3 Opportunities for KKR 5 III.4 Threats for KKR 5 III.5 Share Value: Pre-Bid offer 5 III.6 Share Value:
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its mark on the reputations of both PE firms. But the team faces a challenge when valuing a cross border business involved in the LBO. Not only are those business located in different markets‚ but they also are characterized by different growth rates and cash flow characteristics. Furthermore‚ each business unit faces an immediate uncertainty. 2. Overview of LBO The Equity Sponsor borrows the debt portion of the purchase price‚ typically through public or private bonds and bank loans issued
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