In january 2007, west coast fashions, inc, a large designer and marketer of branded apparel, announced a strategic reorganization that would result in the divestiture of their wholly owned footwear subsidiary, mercury athletic. After using weighted average cost of capital to estimate the value and terminal value of mercury athletic footwear, we find out it is appropriate for agi to do this . This paper introduces the basic situation and feathers of current athletic and casual footwear industry and raises that active management ofshow more content and wacc will increase growth rate and terminal value it is assumed that after 2011 the mercury will continue to grow with a stable growth rate.
Mercury athletic footwear group 7 contents executive summary & overview of problems 3 analysis on mercury acquisition 4 1 reasons why mercury is an appropriate target for agi 4. View mercury athletic footwear case from bufn 750 at university of maryland, college park mercury athletic footwear case dcf valuation analysis jianqiu huang 114833532 bochao liang 115002548 jie xu. Mercury athletic valuing the opportunity - when students have the english-language pdf of this brief case in a course pack, they will also have the option to purchase an audio version.
Mercury athletic footwear designs and distributes athletic and casual footwear dominantly to the youth market mercury competes in four main product lines: men’s and women’s athletic and casual footwear. Men’s athletic footwear is the leading product for mercury athletic women’s casual footwear is mercury’s worst performing product and post-acquisition the line may be discontinued by active gear. Group19 mercury athletic - download as excel spreadsheet (xls / xlsx), pdf file (pdf), text file (txt) or read online mercury athletic financials. Mercury athletic footwear: valuing the opportunity active gear incorporated -founded in 1968 by daniel fiore mercury should agi purchase mercury are the projections formulated by liedtke appropriate calculations -producer, designer and distributor of branded athletic and casual footwear -targeted .
Mercury athletic has 4 major product lines: men’s and women’s athletic and casual footwear men’s athletic footwear is the leading product for mercury athletic women’s casual footwear is mercury’s worst performing product that is may help agi to achieve a lower acquisition price. Mercury athletic footwear problem statement: west coast fashions, inc a large business of men’s and women’s apparel decided to dispose of one of their segments mercury athletic john liedtke, head of the business development for active gear, inc saw it has a possible opportunity for them to acquire it. Content free cash flow of mercury 2007 2008 2009 2010 revenue.
Mercury athletic footwear thus the value of the tax shield is acknowledged in the wacc or in a separate calculation when using apv harvard business school joel l. Mercury athletic footwear mercury athletic footwear mercury athletic footwear question 1 based on the information in the case study, calculate the value of mercury athletic footwear as an independent firm at the time of the case study using the free cash flow method. Essays - largest database of quality sample essays and research papers on mercury athletic footwear wacc.
We will write a custom essay sample on mercury athletic footwear the value of the tax shield is acknowledged in the wacc or in a separate calculation when using . Mercury athletic: valuing the opportunity result in the divestiture of their wholly owned footwear subsidiary, mercury athletic john liedtke, the head of business development for active gear . Wacc=cost of debt1-tax ratedebtvalue+cost of equity(equityvalue) mercury athletic footwear: valuing the opportunity active gear, inc (agi) is a privately held .
The case uses the potential acquisition of mercury athletic as a vehicle to teach students basic dcf (discounted cash flow) valuation using the weighted average cost of capital (wacc) harvard business school. Mercury athletic footwear: valuing the opportunity mercury athletic inc5 61 the last year before agi plans to acquire mercury4 m $42 wacc calculation the . The case utilizes the potential securing of mercury athletic as a vehicle to instruct understudies essential dcf (reduced income) valuation utilizing the weighted normal expense of capital (wacc).