Business Case Studies & Business Publications

Carter International

Schill, Michael J.

Case

Carter International

Schill, Michael J.

F-1771 | Published December 21, 2016 | 11 pages Case

Collection: Darden School of Business

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This case considers the 2016 acquisition of U.S. gambling concern Hope Enterprises by a major hotel company, Carter International (Carter). It is a relatively straightforward exercise in valuing a potential acquisition target. The case presents an opportunity for students to use both discounted cash flow and market multiples in their analysis. In addition, at the instructor’s discretion, students can consider the debt-equity mix in the acquiring firm and evaluate an opportunistic debt issue across different currencies. The case is commonly used as a review case or an exam case for a standard applied corporate finance course.

Review the mechanics of a company valuation, including discounted-cash-flow– and market-multiples–based approaches.; value revenue and cost synergy gains associated with a corporate merger; consider the appropriate capital structure for a postacquisition firm; emphasize the implications of interest rate parity and the borrowing opportunities associated with deviations from parity.