Executive Summary From our DCF calculations‚ the value of Torrington as a stand-alone entity is $1.181 billion. However‚ the maximum purchase price for Torrington should only be $641 million. The optimum debt amount for this transaction would be $301 million. This amount of debt would result in a total debt to capital ratio for Torrington of 47%‚ within the range for a BBB “investment grade” debt rating. The combined entities‚ Torrington-Timken‚ would produce an interest coverage ratio of 3.2‚
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industry‚ is considering acquiring the Torrington Company from Ingersoll-Rand. Torrington – an engineering solutions segment of the Ingersoll-Rand. The main motive of acquisition is to enhance Timken’s market share and product base. Operating synergies are highly expected from this merger with 80 million cost savings by the end of 2007. The presented analysis‚ recommends in our opinion‚ the best course of action in the proposed acquisition of the Torrington Company: * Both companies operate
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CHAPTER 1 OVERVIEW OF FINANCIAL REPORTING‚ FINANCIAL STATEMENT ANALYSIS‚ AND VALUATION Solutions to Questions‚ Exercises‚ and Problems‚ and Teaching Notes to Cases 1. Value Chain Analysis Applied to the Timber and Timber Products Industry. Exhibit 1.A below contains a depiction of the value chain. The links in the value chain are as follows: 1. Timber Tracts: Plant and maintain timber tracts (Weyerhaeuser) 2. Logging: Harvests timber (Weyerhaeuser) a. Sawmills:
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.......................................................................... 3 2. Timken’s Expectations from Torrington .............................................. 3 2.1 Operational Synergies.................................................................... 4 2.2 Financial Synergies ........................................................................ 5 3. Valuation .............................................................................................. 5 4. Debt capital
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$3.07. This P/E multiple was constructed using a weighted Sector: Industrials average comparables multiple of automotive‚ industrial‚ and bearings Industry: Machine Tools & Accessories companies (see Equity Valuation: Multiples section for discussion). Timken is a strong BUY based on valuation‚ with a 38.2% upside to the company’s 11/17/2006 stock price of $30.38. Stock Data Estimates Price: US $ 30.38 (US$) 2004A 2005A 2006E 2007E 2008E Price Objective: US $ 42.00 GAAP EPS $1.50 $2.81 $2.81 $3.07
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business operations and also add new products to their portfolio. Torrington Acquisition To fulfill the above stated objectives Timken decided to pursue the acquisition strategy and chose Torrington as its potential target firm. Both Timken and Torrington had more than 100 years of operating experience in anti-friction products. Torrington was therefore chosen to be the good fit for the company‚ primarily because: * Torrington would help Timken gain foothold in Europe from where it derived 17%
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TIMKEN COMPANY Teaching Note Synopsis and Objectives The acquisition of Torrington from Ingersoll-Rand (IR) required a strategy that would meet both the investment and the financing objectives of the Timken Company. In that regard‚ the case provides an excellent example of the principle that investment and financing decisions can be considered independently. In effect‚ Timken captured the positive NPV of Torrington even though Timken was required to increase its leverage beyond its capital-structure
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Group 1 Deadline for electronic submission of presentation slides and case reports Nov 14‚ 1:00 pm Deadline for electronic submission of questions Nov 15‚ 8:00 am Questions: 1. What are the key characteristics of the bearing industry? 2. How does Torrington
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Executive Summary In this case we analyst whether Timken should acquire Torrington company from Ingersoll-Rand by cash‚ issuing share to public or issuing share directly to IR. IR wanted to divest Torrington and Timken aim to acquire it. After merging with Torrington Timken will be world third largest company in bearing industry and Timken would gain more sales as Timken and Torrington has about 80% of overlapped customer. Moreover after the synergy they can reduces cost‚ increase market shares and
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case‚ analysis of Timken’s bidding decision and bidding strategy‚ valuation‚ and your conclusion. For Support Groups: the report should be no longer than three pages of text each (double space‚ Font 11‚ 1 inch margin on all sides). You should also include any additional financial analysis (i.e. tables) that you would like to attach. Summary and Objectives The Timken Company was considering acquiring The Torrington Company from its parent‚ Ingersoll-Rand. The management of The Timken
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