Finance Essay

922 words - 4 pages

Finance ProjectTarget - What's happening with Target? Merger online as far as plan to buy/ future plans/ CEO compensation % stock own../ insider's plan… if executive selling (hint for stock value going down) INSIDERS TRANSACTIONS - not seculed or not - Scottsdale (Option exercise)M&A and DivestituresCapital StructureDistributions to ShareholdersDo nothingM&A & DivestituresCurrent marketLayoffs, consolidation and disinvestmentSubsidiariesCEO CompensationCapital RestructuringShort-term Wal-MartLong-term Target/Wal-Mart2. M&A - At this point where the company stands and looking at its financial situation, we don't think it's necessary for any merger or acquisition because Target has been doing pretty well through out last couple of decades and it does have strong brand image to carry on its operation; however, at the same time if it wants it could look into to an option of acquiring its competitor to expand its operational activities. (W-Mart/ Kroger/ The Home Depot)For synergy for beneficial to both companies1. operating economies - economies of scale in management, marketing, production, or distribution2. financial economies - icludig lower transaction costs and better coverage by security analysts3. tax effects - where the combined enterrise pays less in taxes than the separate firms would payTax ConsiderationsPurchase of Assets below Their Replacement CostDiversificationManagers' Personal IncentivesBreakup ValueVertical or Horizontal1. how much would the target be worth after being incorporated into the acquirer?2. how much should the acquirere offer or the target? Obviously, a low prie is better for the acquirer so depending Discount cash flow techniques amd market multiple analysis it can value the merger (DCF method) 1. the corporate valuation method 2, the adjusted present value method, and 3. the equity residual methond also called the free cash flow to equity methodAnother option is to create corporate alliance, which allow firs to create combinations that focus on specific business lines that offer the most potential synergies to achieve specific, limited objectives. Controlled by a management team consisting of representatives of the two parent companiesCurrent marketLayoffs, consolidation and disinvestment - If things keep getting worse, target - Achieving efficiency in declining businessSale of subsidiary to another firmPrincipal Subsidiaries: The Associated Merchandising Corporation; Dayton's Commercial Interiors, Inc.Principal Divisions: Target Stores; Mervyn's; Marshall Field's; Target Financial Services; target.directCapital restructuring initiatives.Obviously, managers should choose the capital strucreu that maximizes shareholder's wealthCost of debt - 4%Market risk - beta is 1.05 walmart (1.02) industry (.936)Financial risk, which is the additional risk placed on the common stockholders as a result of the firm's decision to use debt (50/50 debt/ equity)Business risk - risk from its operations and if the...

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