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- Creators: Department of Finance
Description
This thesis provides a detailed analysis and risk assessment of the various stakeholders impacted by the US Airways-American Airlines merger. The stakeholders include employees, shareholders, new American passengers, the cities of Phoenix and Dallas, and other airlines. In order to understand how these stakeholders are impacted, we did thorough analysis of past major airline mergers and referenced cases from those mergers. Because the history of the airline industry is filled with hundreds of mergers and acquisitions, we only reference the America West-US Airways, Delta-Northwest, United-Continental, and Southwest-AirTran mergers in our thesis.
ContributorsFoletta, Hannah (Co-author) / Duckworth, Jessica (Co-author) / Dawson, Gregory (Thesis director) / Moser, Kathleen (Committee member) / Barrett, The Honors College (Contributor) / Department of Marketing (Contributor) / Department of Finance (Contributor) / Department of Information Systems (Contributor) / School of Accountancy (Contributor) / W. P. Carey School of Business (Contributor) / WPC Graduate Programs (Contributor)
Created2014-05
Description
We chose to analyze Apple's current cash and cash equivalents balance of $246.1 billion. To fully understand how to maximize Apple's investment using this cash balance, we performed detailed due diligence on the company. We analyzed the history of apple, a timeline of their major product releases, their financial statements, product mix, and the industries in which they operate. This allowed us to gain a deeper understanding of available opportunities. After doing our due diligence on the company, we look at their current cash levels and potential reasons that the cash balance has been increasing so quickly. Another component of their cash balance is the implications of a tax holiday for repatriation, so we also looked at the potential effects of this on Apple's cash balance. Finally, we begin the main portion of our project where look at the six potential options for the cash. We cover share buybacks, dividends or a special dividend, paying down debt, investing in research and development, making a large acquisition, or continuing to build a high cash balance. We pull data on each of these, look at financial metrics and many different numbers to evaluate which of these six options would maximize shareholder value. A large portion of our work was spent looking at acquisition targets. We finally vetted three potential targets: Tesla, Netflix, and Disney. These companies made sense for a number of different qualitative reasons, but after looking at them from a financial standpoint we concluded Disney was the only company worth modeling out. A detailed financial model was built on Disney to find a purchase price. Included in this was a discounted cash flow analysis, comparable company's analysis, analyzing precedent transactions, and then finding an enterprise value based on the model. We also built an accretion dilution model to see what the effect on earnings per share is and also what the combined entity would look like. In order to present our findings, we built a pitch book. A pitch book is the standard type of presentation that investment banks use in order to show their recommendations to companies.
ContributorsMuscheid, Michael (Co-author) / Klein, Matthew (Co-author) / Lauro, John (Co-author) / Gagner, Landon (Co-author) / Simonson, Mark (Thesis director) / Stein, Luke (Committee member) / Department of Economics (Contributor) / Department of Finance (Contributor) / School of Accountancy (Contributor) / W. P. Carey School of Business (Contributor) / Barrett, The Honors College (Contributor)
Created2017-05