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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Zimmerman had a lot on his plate. We assume the equity as the average equity of the industry, which is 0. First, when we calculate the operating value, we use the DCF model. Operating Results As a starting point, Jennifer decided to create a base case using historical operating results connnections a guide, and then create an upside case that considered possible synergies.

AirThread Connections Case

Hi there, would you like to get such a paper? The authors Erik Stafford and Joel L. 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. Further, she wanted to keep aitthread simple by assuming a stock purchase using the maximum amount of leverage available.

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.

Wider debate The case includes two interesting characters — Zimmerman and Zhang, but contention among the characters is not the primary aim conndctions the case. The acquisition would give American Cable 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. This would help ensure that ACC remained a viable industry player and would also help improve profitability through better network utilisation.


Featured case – Valuation of AirThread Connections | The Case Centre, for educators

Stafford, Erik, and Joel L. Heilprin, Illinois Institute of Technology Finance Professor and Managing Director of 59th Street Partners prepared this case solely as a basis for class discussion and not as an endorsement, a source of primary data, or an illustration of effective or ineffective management.

Zhang was well aware that the terminal value was likely to be the single largest component of the valuation. Furthermore, expanding into the business segment would help each firm increase its network utilization and, as a result, increase its Do cost efficiency.

Cite View Details Purchase. A large portion of wireless connectons operating costs related to moving traffic from cell towers to central switching offices using either landlines leased from competitors or technically cumbersome microwave equipment.

Second, the acquisition could help both companies expand into the business market. Given the projected synergy and financing method, what is the value of AirThread as a merger target? Hold-to-maturity accounting of portfolio net asset value eliminates the majority of measured risk.

Valuation of AirThread Connections Essay

First, we calculate the operating value during and using APV. We assume the negative growth rate in is abnormal, so we remove this rate from our calculation.

When By earlyZimmerman was considering the airhhread of acquiring AirThread Connections, one of the largest wireless companies in the United States. American Cable currently offered video, internet, and landline telephony, but did not have any kind of wireless offerings.


About the Author Erik Stafford. Treasury bonds; 2 the cost of bank deposits exceeds the cost of bank debt; 3 bank equities have Alrthread betas near one, while passive maturity transformation strategies have CAPM betas near zero; and 4 portfolios of bank equities consistently underperform portfolios designed to passively mimic their economic exposures. Finance Globalization Health Care.

Remember that different valuation models are not mutually exclusive, you can use different model for different forecasting periods. Second, airtherad acquisition could help both companies expand into the business market.

Based on the projected cash flow information provided in the case, what is the stand- alone value of AirThread? Rev is based on equipment airthrear. In addition, the handwriting was on the wall in terms of service offering convergence.

Cite View Details Purchase Related. Furthermore, the company believed that its core competency as an acquirer would continue to play a fundamental role in its future success.

In addition, the company also believed that its experience as an acquirer had allowed it to develop unique operational know-how in the area of merger integration. First, American Cable and AirThread could help each other compete in an industry that was moving more and more toward bundled service offerings.