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Prasad G. Godbole
Copyright 2009 Vikas Publishing House Pvt. Ltd. All rights reserved. Prasad G. Godbole. All rights reserved.
Chapter 6
Intents of Target Companies
Copyright 2009 Vikas Publishing House Pvt. Ltd. All rights reserved. Prasad G. Godbole. All rights reserved.
CHAPTER 6
CHAPTER 6
Corus Plc was sold out to Tata Steel since the former was making losses. In the years through 2000 to 2003 it had posted losses of GBP 1.271 billion, 462 million, 404 million and 255 million, respectively. The writing was clear on the wall that unless the company joined hands with a low-cost producer of steel, who also has a captive source of iron ore, its long-term viability was in danger. Thus, it decided to take the wiser route of selling out to Tata Steel.
CHAPTER 6
CHAPTER 6
CHAPTER 6
India Cement sold 94.69 percent of its stake in Shri Vishnu Cement at an enterprise value of Rs. 385 crore.
The objective behind this was to generate cash for retiring high-cost debts of India Cement and also for funding its expansion plans.
CHAPTER 6
CHAPTER 6
Original Thums up
New Thums up
CHAPTER 6
CHAPTER 6
It is believed that, after supporting L&T against Reliance, Financial institutions were this time favouring Birla group. Birlas were in a position to increase their stake in L&T through creeping acquistion.
Financial Institutions
Thus, L&Ts professional management agreed to give away the cement business to Birla mainly because of their own survival.
CHAPTER 6
Low Market Capitalization vis--vis Intrinsic (Present/Potential) Value Low Market Capitalization vis--vis Replacement Cost of Assets Low Market Capitalization vis--vis Book Value Cash Flows in excess of Debt Servicing Requirements Lowly Geared Companies Underperforming Companies Unexploited Brand Potential Undervalued and Saleable non-operating assets Large Off-Balance Sheet Assets