Massey-Ferguson Case
Massey Ferguson Case
Advanced Corporate Finance
The Company
Massey Ferguson is a multinational producer of farm machinery, industrial machinery and diesel engines. The company was formed through a merger between Massey-Harris and Harry Fergusson in 1953. They combined their skills to become the West’s largest producer of farm tractors and the world’s largest supplier of diesel engines to original equipment manufacturers.
Massey’s farm machinery line consists of tractors, several harvesters and other agricultural equipment. The industrial machinery line consists mostly of several industrial tractors. Diesel engines were produced in Coventry, England by the Perkins Engines group. Perkins engines were used in Massey-Ferguson’s equipment. Massey had run third in the worldwide sales of farm equipment in the large North American farm equipment market. Massey-Ferguson was well-known for not only be in markets inside North-America and Western Europe, but also dealing with governments and public institutions in less-developed countries.
However in 1978 Massey-Ferguson went downhill. They reported an unpredicted loss. The board of directors assigned a new president to the company to restore the profitability. In 1979 Massey-Ferguson showed a profit but earnings were still disappointing. Hence, the company was in financial distress and facing to be in default on several loan covenants.
This report provides an analysis on the Massey-Ferguson financial situation of 1980, starting with an explanation of how Massey got into troubles from 1976-1980. This is done by making a comparison between Massey and it’s two biggest competitors in farm equipment and analyze what impact different financial decisions might have had.
Comparison with competitors
Thereafter this report comes up with a advice of how Massey’s management should restructure(refinance) it’s company to get positive earnings. This advice takes various interested stakeholders into account, including
Advanced Corporate Finance
The Company
Massey Ferguson is a multinational producer of farm machinery, industrial machinery and diesel engines. The company was formed through a merger between Massey-Harris and Harry Fergusson in 1953. They combined their skills to become the West’s largest producer of farm tractors and the world’s largest supplier of diesel engines to original equipment manufacturers.
Massey’s farm machinery line consists of tractors, several harvesters and other agricultural equipment. The industrial machinery line consists mostly of several industrial tractors. Diesel engines were produced in Coventry, England by the Perkins Engines group. Perkins engines were used in Massey-Ferguson’s equipment. Massey had run third in the worldwide sales of farm equipment in the large North American farm equipment market. Massey-Ferguson was well-known for not only be in markets inside North-America and Western Europe, but also dealing with governments and public institutions in less-developed countries.
However in 1978 Massey-Ferguson went downhill. They reported an unpredicted loss. The board of directors assigned a new president to the company to restore the profitability. In 1979 Massey-Ferguson showed a profit but earnings were still disappointing. Hence, the company was in financial distress and facing to be in default on several loan covenants.
This report provides an analysis on the Massey-Ferguson financial situation of 1980, starting with an explanation of how Massey got into troubles from 1976-1980. This is done by making a comparison between Massey and it’s two biggest competitors in farm equipment and analyze what impact different financial decisions might have had.
Comparison with competitors
Thereafter this report comes up with a advice of how Massey’s management should restructure(refinance) it’s company to get positive earnings. This advice takes various interested stakeholders into account, including