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澳洲留学生作业写作需求:CORPORATE FINANCE ASSIGME

CORPORATE FINANCE ASSIGMENT
Background
You are the Finance Director of a very large retail company, with stores across the US andin 15 countries worldwide, particularly in Central America and Asia. Your stores sell both
澳洲留学生论文groceries and general merchandise. In 2007 your company, with headquarters in the USand listed in the New York stock exchange, was valued at just under US$100 billion, butsubsequent events in both the stock market and product markets severely depressed itsvalue, leaving investors disappointed.

Your company is facing increasing competition in its main markets, and declining profitmargins. Over the next twelve months it will need to invest heavily into reorganising andaltering its portfolio of products, following changes in consumers’ preferences and demand.In addition, your company has had to face an increasingly contentious public image.Specific criticisms include the company's extensive foreign product sourcing, low rates ofemployee health insurance, resistance to union representation, and alleged racism, amongother things.

The company is considered by the Board of Directors to be financially sound with plenty ofcash reserves and a good mix of debt/equity in its capital structure and certainly within itstarget ratio. However, the solid financial performance in the last financial year has done littleto offset a drop in investors’ confidence as a result of the credit crisis. During the last Boardmeeting the CEO informed the Board that: “There is now considerable pressure from themain shareholders to take measures to improve the value of our company, otherwise ourdepressed stock market value could make us a potential takeover target.” Therefore, theBoard asked the CEO to find a suitable acquisition target company.

The CEO believes that it is strategically important for the company to further diversifygeographically and improve its public image. After considerable research, data gathering
and analysis, the CEO has focussed her attention on Europe, and particularly on the UK, acountry with a relatively good record of corporate governance and corporate socialresponsibility. Her eyes are on J Sainsbury plc, a leading UK food retailer, which hasrecently been the target of unsuccessful takeover bids. Although Sainsbury’s share priceincreased sharply in 2007 amid takeover talks, it plummeted months later when noagreement was reached and further tumbled during the credit crisis. Further speculation that the firm may be acquired has led to more share price fluctuations in 2009.

The CEO believes that J Sainsbury is a risky investment given the economic outlook for theUK and the fierce competition in the industry but certainly good value for money and a goodmatch for her company that has particular skills and capabilities. These can be used toenhance the target’s value through boosting its sales’ growth by a further (over and abovethe forecasted growth for the standalone company) 3% in 2011 and 1% for each of the next3 years. Of course there is always uncertainty associated with such forecasts, particularlygiven the ambiguity of economic forecasts during the recovery. A relatively safe prediction isthat your company can contribute reducing the target’s predicted cost of sales/sales ratio by



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