CHRISTIAN SCHOPPER 20 Merchant Court, 61 Wapping Wall London E1W 3SJ, U.K. +44 (0)7768 854 655

christian.schopper@aon.at

Eipeldauerstr. 38 / 22 Top 8 1220 Vienna, Austria +43 (0)664 440 0154

CASES IN STRATEGIC FINANCE

Course Description Executive Summary Content The aim of our sessions is to review and discuss your proposals in regards to several case studies in an international Corporate Finance context. Learning Approach As needed, theory / concepts / techniques will be reviewed in the course of the sessions: However focus will be on your presentations, in-depth financial analysis and proposals of strategic decisions in respect to various case studies. Hence, you will need to come to class very well-prepared to present and defend your conclusions and decisions in each case situation: 1. 14 April - ACCESSING THE CAPITAL MARKETS: You will be required to hand in a 5-page written analysis (text version)

of the Case Study: Veuve Clicquot, answering among others the following questions / focussing on the following themes:

a. You are the manager of an equity fund and consider upon whether or not to invest in Veuve Clicquot (VC) and if so at which price. For this purpose you run a full operational and financial analysis whereby you will compare VC with its competitors. Also any valuation of VC shares will be cross-checked with the valuations of the respective competitors. Your views will be deemed for the investment committee focusing on why or why not you will invest and why or why not - the intended investment will be a success

b. In the context you focus on among others - the following: i. Provide a full analysis about VC and its competitors (Cash Flow; Working Capital Analysis; Margin Analysis;

Growth Dynamics; Return Dynamics on the basis of a decomposition (!) of: RoE; RoA; RoI; etc.) ii. Present a company (and hence share price) valuation of VC based on the share price of comparable

companies, whereby you lay references to as many possible parameters as possible. - What will the most likely share price be? And, would you invest at that price?

iii. How will you make money as an investor? What return would you expect to achieve?

2. 28 April - MERGERS & ACQUISITIONS: You are required to hand in a 5-page summary paper (text version) of the Case Study: MRC, focusing on the following: You are Mr Brintons advisor and prepare for him a presentation assessing among others the following themes:

a. Would you advise to go ahead with the proposed acquisition: yes or no and why? (Among others, assume for your analysis following macro-economic parameters for 1960: US inflation rate: 1.5%; US Treasury Bill Yield: 2.7%; US Long Term Government Bond Yield: 4.1%)

b. If yes: i. What is the strategic and financial logic of the transaction? ii. What maximum price would you pay? (For this purpose come up with a simple forecast of key financial

parameters and a Discounted Cash Flow analysis) iii. How would you finance the acquisition? In which structure? On what terms? iv. How would you integrate the acquired target? What operational and / or financial synergies would you

expect to gain over time? How much are latter worth? v. Any structural thoughts, terms, conditions in regards to the acquisition?

c. If no: i. Why does the potential transaction make no strategic sense? ii. Why does the potential transaction not meet financial thresholds? (For this purpose come up with a

simple forecast of key financial parameters and a Discounted Cash Flow analysis) iii. What are the (better) strategic and financial alternatives without going ahead with the potential

transaction? How would each of them impact the financial performance of the company? iv. How would you advise to pursue MRCs further strategy?

3. 12 May - RESTRUCTURING: You will be required to hand in a 5-page summary paper (text version) of the Case Study:

Coleco, answering the following: You are Mr Meyer and seek alternatives to re-structure Colecos balance sheet whereby minimising shareholder dilution:

a. Provide a full financial analysis about Coleco including among others: Cash Flow; Working Capital; Margins; Growth Dynamics; Return Dynamics. Basis of your analysis is also a decomposition (!) of: i. Return on Equity (break down RoE in at least 4 core drivers and explain the trends) ii. Return on Assets (break down RoA in at least 3 core drivers and explain the trends)

iii. Return on Investment (break down RoI in at least 3 core drivers and explain the trends) iv. Explain what are the reasons for the trends you observe (whats the story behind the financial figures ...)

b. What financing and restructuring options are available? What would you propose? i. What can you offer to your creditors, bondholders and shareholders considering the financial

performance and the asset base of Coleco? Structure a package which will ensure that the company has a solid financial basis again

ii. What will be the creditors and bond holders position after your proposed financial restructuring? How would you expect them to react to your proposal?

iii. What impact will your proposal have on balance sheet and income statement (Draft an income statement and balance sheet on the basis of 1987 including your proposal)?

iv. How would you implement your proposal considering the market environment at that time? 4. 26 May ACCESSING THE CAPITAL MARKETS: You will be required to hand in a 5-page written analysis (text format) of

the Case Study: Nixdorf, answering among others the following questions / focussing on the following themes: a. You are Sven Kado and decide upon the optimal funding strategy going forward for Nixdorf so that the

growth dynamics of the Company is optimally supported. - For this purpose you run a full operational and financial analysis whereby you will thoroughly analyse the various capital markets segments (bank loans, bonds, equity) and the mood as well as capacity to absorb Nixdorf issues.

b. In the context of this presentation, you focus among others - the following: i. Provide a full financial analysis (Cash Flow; Working Capital Analysis; Margin Analysis; Growth Dynamics;

Return Dynamics on the basis of a decomposition (!) of: RoE; RoA; RoI; etc.) ii. Present a company (and hence share price) valuation of VC based on the share price of comparable

companies, whereby you lay references to as many possible parameters as possible. - What will the most likely share price be? And, would you invest at that price?

iii. How will you make money as an investor? What return would you expect to achieve? c. What financing and options are available? What would you propose?

i. Structure a proposal which will ensure that the company can continue to grow aggressively going forward ii. What will be the position of: Mr Nixdorf, employee shareholders, banks after your proposal has been

implemented? How would you expect them to react to your proposal? iii. What impact will your proposal have on balance sheet and income statement? iv. How would you ensure that the capital markets can absorb and digest your proposal?

5. FURTHER CASES YET TO BE ANNOUNCED Preparation and Grading

Participation is mandatory Your respective Paper Summaries and must be sent to me latest 2 (TWO) DAYS BEFORE class starts via Opolis

Secure Mail (please open a free account via www.opolis.eu) Also all other correspondence between you and me for any questions in regards to the course or the case

studies, as there may be - will be via Opolis Secure Mail only You are encouraged to team up in pairs (i.e. 2 individuals not more!) to prepare the respective presentations.

But, having said this, you have to work on every assignment together: Hence, just splitting up the cases as such between individuals is not acceptable

Grading will depend on the quality of hand-ins (50%) and your individual participation in classroom (50%). Short tests may take place at the beginning of each session covering the previous session

The course and all correspondence will be in English NOTE: The course is intense and will require substantial amount of individual preparation. As for some of you the

technique of case studies may be new, just ensure that each of your argument is based on the text and / or the appendices of the respective case study. (Later in class, if you make a statement, always be prepared to let us know where you have your facts from ...)

Literature There is a vast amount of excellent literature on capital markets available. I propose that you choose articles and books you feel comfortable with. As a preparation for the course I would suggest that you should become familiar with capital market products, basic valuation techniques and income statement / balance sheet structures. Good references are among others:

Damodoran, Aswath: Corporate Finance; Investment Valuation

Brealey, Richard Myers, Stewart: Principles of Corporate Finance; Fundamentals of Corporate Finance Koller, Tim et al: Valuation Ross, Steven Westerfield, Randolph et al: Corporate Finance Pettite, Justin: Strategic Corporate Finance