The Hilton-ITT Wars Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Drop out of the bidding

The offering price of the Hilton Company is $55in cash for 50.1% and $55 for their share exchange as respect to the percentage of 49.9%. As per the analysis of the firm value, the offered price is not up to the worth of the ITT Company because it’s showing the worth of $68 per share value which is mentioned in the excel sheet file name as “consolidated DCF” and also annexed in this report of Appendix B. It’s better for the Hilton to drop the bidding price, which have been mentioned in the case scenario. It also effect on the financial health of the company which is not suitable at the current status of the organization.

Raise the offering price and, if so, by how much?

On the basis of the analysis is done in the excel file sheet that the price of per share should be more than $68, because the firm has greater value on its share price. On the other hand organization also has reputation in the market. These are the basic criteria for raising the offering price for acquisition of the respective entity.

Step 1: Problem Identification

Determine what you believe are the two largest problems that must be addressed by Hilton. Use specific details in the case to support your answers?

The two largest problems of Hilton are based on the certain things which are affecting the financial statement of the enterprise. Two problems of Hilton are as follows

Low capacity of finance
Inadequate management

These two problems covering several problems of the entity because it's creating a bad image in the market environment. For overcoming these issues the enterprise has to develop some effective plans and manage the environment through efficient sources. Finance has overcome through the management of debt and equity ratio and management will improve through adequate internal controls of the organization. If these things will improve than automatically the company graph will be moving tothe upside.

Step 2: Case Analysis

Subject Matters

Analysis is done with respect to the case material and scenarios under the best knowledge of financial management and Financial Reporting. These analysesare done in the excel file sheet; legends are as follows:

Multiple Comparison = red color
Consolidated Discounted Cash flow, Industry Comparison is reflecting= blue colors.

These analysesare also attachedto this report, and in different excel sheets for the understanding of all the formula with respect to the calculations.

Analysis

On the basis of analysis, multiple comparisons showing the best performance of the company by having some effective return on assets and equity. All four businesses showing their best strength for the enterprise as well as their earnings per share.

In the Consolidated Discounted Cash Flow, there are two calculation performed. One is complete with regard to Hilton-ITT wars and Second done with respect to the standalone of ITT financial position. ITT is showing better results in their single running organization with respect to all criteria. On the other hand Hilton-ITT wars is not well in comparison of standalone ITT performance measurement. It has $68 enterprise value per share while Hilton is showing $74 (EVPS) with respect to all acquisition material.

Industry comparison giving the position signal in every aspect of the “comparison” and “acquisition criteria”areshowing realistic approaches of industrial environment. These analysesare also attached in the Appendix A, B and C

Conclusion

On the basis of all analysis raising the offer/tender price is a better choice for the “acquisition criteria”. It has many advantages for the entity in financial health as well as market goodwill. Please go through all excel sheets and the appendices.

Step 3: Recommendation Deliverable

The recommendation is given on the basis of the calculation done with respect to all criteria to choose a better option for the enterprise. Now the suggestion is given in light of relevant question. The following are question and answer of the final recommendation for the company as scenario suggested.

Why might Bollenbach have opened his bidding for ITT at $55 per share? What was his likely strategy?

The Bollenbach offer the price for the acquisition because there are a lotof potentialities for the respective entity which will improve the financial position of the company. Bollenbach decide this price $55 which having a 29% margin of their share price that is $43. The strategy he is following is “take over for the betterment” in every aspect of the entity. It tells the enterprise that how to appraise their performance in regard of every provided material.................

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This case serves as a means to discuss analytical approaches to understanding the trading strategies in a hostile tender offer installation. In 1997, Hilton Hotels Corporation offered to acquire ITT Corporation in unwanted bid. ITT resisted several ways. At the date of the event (July 17, 1997), ITT announced the restructuring of the company aimed at delivering about $ 70 share of its shareholders. The task for the student to understand why attempts absorption Hilton failed so far, and what the possible answers might be at this stage. The case has completed an assessment of the analysis ITT (prepared casewriter), which suggests that ITT is, at most, $ 89 share of the Hilton. In the preparation of possible higher bid for the company, the student will have to weigh the likelihood of another bidder entering the fray and offer price that competitors. The teacher can use this to compare the prospects of target shareholders with "Prisoner's Dilemma" and the classic discussion of the expected values are tender - both concepts play an important role in the development of trading back.
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by Robert F. Bruner and Sean Carr, Sanjay Vakharia Source: Darden School of Business 31 pages. Publication Date: April 21, 1998. Prod. #: UV0083-PDF-ENG