Case Study Atlantic Corporation
Project Genesis | Atlantic Corporation | ACE Consulting Group | “A service we provide with excellence“ |
-------------------------------------------------
Executive Summary
The purpose of this report is to assess the viability of the acquisition of Royal Paper Corporation’s (Royal) Monticello mill and box plants by Atlantic Corporation (Atlantic). This will be conducted through the evaluation and analysis of whether this project is profitable and also if this is a sound strategic move.
In making our final decision, we have undertaken extensive qualitative and quantitative analysis. Such factors we have taken into consideration are the future trend of linerboard prices, the profitability of the linerboard industry and whether this acquisition will improve Atlantic’s position in the forest product and the linerboard industry. Furthermore we have investigated the prices that Atlantic should pay to acquire the linerboard and box mill operations from Royal, as well as finding the amount of external financing required and by which means of funding the acquisition should be conducted by.
Through our quantitative and qualitative findings, we believe Atlantic should undertake the acquisition of Royal’s Monticello mill and box plants, as Atlantic has the opportunity to strengthen their linerboard capacity. In addition, we have determined the value of this acquisition is at a price of $417.413, under the Corporate Valuation Model.
Furthermore, we estimate that external funds of $302 million would be required should Atlantic proceed to acquire the mill and plants at $319m. Our suggested funding mix is US$106 million debentures; and US$210 million common stock (proceeds of US$196 million) as we believe Atlantic should issue debentures to the point that does not affect bond rating, and then issue common stock.
-------------------------------------------------
Atlantic’s Operating Strategy
Acquisition of
-------------------------------------------------
Executive Summary
The purpose of this report is to assess the viability of the acquisition of Royal Paper Corporation’s (Royal) Monticello mill and box plants by Atlantic Corporation (Atlantic). This will be conducted through the evaluation and analysis of whether this project is profitable and also if this is a sound strategic move.
In making our final decision, we have undertaken extensive qualitative and quantitative analysis. Such factors we have taken into consideration are the future trend of linerboard prices, the profitability of the linerboard industry and whether this acquisition will improve Atlantic’s position in the forest product and the linerboard industry. Furthermore we have investigated the prices that Atlantic should pay to acquire the linerboard and box mill operations from Royal, as well as finding the amount of external financing required and by which means of funding the acquisition should be conducted by.
Through our quantitative and qualitative findings, we believe Atlantic should undertake the acquisition of Royal’s Monticello mill and box plants, as Atlantic has the opportunity to strengthen their linerboard capacity. In addition, we have determined the value of this acquisition is at a price of $417.413, under the Corporate Valuation Model.
Furthermore, we estimate that external funds of $302 million would be required should Atlantic proceed to acquire the mill and plants at $319m. Our suggested funding mix is US$106 million debentures; and US$210 million common stock (proceeds of US$196 million) as we believe Atlantic should issue debentures to the point that does not affect bond rating, and then issue common stock.
-------------------------------------------------
Atlantic’s Operating Strategy
Acquisition of