presence. Through this subtle propaganda‚ Stalin was able to align himself with Lenin in the public eye. He therefore gained national support by associating his image and policies with the former glorified national ‘hero’. In Stalin’s successful bid for power within the Bolshevik party‚ he both aligned himself with Lenin in the public eye as well as asserting his power as General Secretary. Unlike Trotsky‚ Stalin was content with mundane administrative work and during Lenin’s reign‚ he handled
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What is CSX’s motive for buying Conrail? • Synergy effect with lower cost The merged company could consolidate overlapping operations and reduce cost. CSX estimated that cost reduction would yield an additional $370 million in annual operating income by the year 2000‚ net of merger costs. • Expansion of market share by extending railroad network Railroad industry is a mature market. The only option to grow is through acquisitions. In 1995‚ Conrail owned 29.4% of the Eastern rail freight
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Restructuring (TB) Prof. Josè Neves de Almeida Q1. The rationale behind the intention of CSX to buy Conrail is mainly to anticipate a proposal from the other big player in the market Norfolk Southern. Both CSX and Norfolk Southern have basically the same routes and the latter company holds an advantage which is its capability to manage costs – more efficient. In case Norfolk Southern acquires Conrail‚ CSX will have serious problems to compete against them because they will have a wider range of connections
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Basic Industry Railroads CSX Corp. Conrail Inc. Rating: HOLD (Moderate Risk) Company Update Brian R. Routledge‚ CFA (212) 778-1501 CSX (46 1/2)—NYSE CRR (85 3/4)—NYSE CSX announces merger proposal with Conrail. Longer-term benefits balanced against near-term uncertainties. Lowered CSX rating to Hold given earnings dilution over the near-term. October 18‚ 1996 Earnings Per Share Fiscal Year Ending Shares P/E O/S Ind. 52Week 12/95 CSX 12/96E
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Acquisition of Consolidated Rail – Case Study 1. Background Info - Conrail 1.1. Formed from the remains of the six bankrupt North-eastern railroads in 1973 1.2. Earned its first profit in 1981- $39.2m on revenues of $4.2bn. Privatised through an IPO in 1987 1.3. Major player in North-eastern cities and their connection with major Mid-western hubs 1.4. In 1995‚ had 23‚510 employees‚ operated 10‚701 miles of track and controlled 29.4% of the eastern rail freight market 1.5. Financial indicators-
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Conrail Case Study 1. Why does CSX want to buy Conrail? Why can CSX justify paying a premium to acquire Conrail? The Stagger’s Rail Act of 1980 has created a deregulated environment in which acquisitions are used to improve the competitive positioning of existing companies within the railroad industry. CSX is interested in Conrail for a couple of reasons. Primarily‚ CSX-Conrail merger would result in more than $8.5 billion in revenues and nearly 70% of the Eastern market. The combined entity would
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per share value of Conrail to Norfolk Southern? To CSX? What factors account for the difference? To find out the per share value of Conrail to Norfolk Southern and to CSX‚ first we use DCF to calculate the total gain in operating income which come from acquisition. We assume the 30-year U.S. Treasury rate (6.8% from exhibit 10) as the risk-free rate and the historical average market risk premium to be 7.5%. As for the beta‚ we use the average of the pre-merger betas of Conrail and CSX‚ which is
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9-209-022) Study Questions 1. Do you think TB or Schneider would create more value as the owner of Citect? 2. TB would assume what risks if they are the winning bidder? 3. Should TB continue to bid on Citect and at what price? Are the expected ROIs and IRRs to TB sufficient at your revised bid amount? (* note: a detailed evaluation model will be constructed during the class session *) Study Questions 1. Is Newell just another conglomerate? How is it organized differently? 2. What general
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CASE QUESTIONS Cash Flows and Value. Cost of Capital Case 1: Hop-In Food Stores‚ Inc. 1. Determine the correct price for this particular IPO. Use several methods to do this and compare them. 2. What extra information would you try to acquire in a real life situation? Case 2: Chem-Cal Corporation 1. How do you calculate the WACC for this firm? 2. What is the cost of capital of the debt‚ preferred stock‚ and common stock (assume the equity beta is 1.22)? 3. Calculate the WACC. How can a WACC be used
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ISSUES CONCERNING VARIATION 4. POINTS OF POSSIBLE CONTENTION WHICH SHOULD BE CATERED TO IN VARIATION CLAUSES IN CONTRACTS 5. VARIATION IN THE FIDIC RED BOOK 6. VARIATION IN THE IITM(INDIAN INSTITUTE OF TROPICAL METEOROLOGY)‚INVITATION FOR BIDS 20 Chapter 1 INTRODUCTION 1. BACKGROUND India’s economy has been on the upswing ever since the process of economic reforms was started in1991
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