A diversified mid-sized manufacturer of kitchen tools contemplates a stock repurchase in response to an unsolicited takeover. The company must determine the. BLAINE KITCHENWARE Case Exhibit 1 Operating Results: . beta calculation is based on a constant capital structure 1 Un-levered beta is the . 年5月14日 Blaine Kitchenware:Capital Structure Summary: Blaine Kitchenware, Inc. was founded in and as a mid-sized producer of branded small.

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Acquirers could pay way less than they originally expect to buy out the firm. Debt being a cheap source of finance and given the industry standards confirming the availability of the debt as well as the conformity by the rivals in subscribing to the debt capital, it seems wise to have a levered capital structure instead of having a completely unlevered one as it would have affected the cost of capital of the company.

Blaine Kitchenware, Inc: Capital Structure | The Case Centre, for educators

The case is set in earlynearly two years after significant modifications in these systems and procedures. Order a custom essay Print this page Search again Word count: Cost of capital when the company is unlevered Dividend per share D1 0.

Victor Dubinski and the board were eager to continue what they believed had been a fruitful strategy. Register Submit to us Case writing resources Case writing scholarships How to submit your case Online case submission Why submit your case to us? The company has been earning less profits and hence it is of the opinion of distributing the profits to shareholders instead of retaining it for further investments.

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This is the main issue which Structurs Dubinski has to deal with. The company must determine the optimal debt capacity and capital structure, and subsequently estimate the resulting change in firm value and stock price. Luehrman and Joel L.


How would such a buyback affect Blaine? Net worth in Each of us is qualified to a high level in our area of expertise, and we can write you a fully researched, fully referenced complete original answer to your essay question. It is evident that the cost of capital has reduced when the company decided to go for share repurchase using the surplus cash and debenture issue. As a non iitchenware member, the stock repurchase will make me more skeptical because the shares owned by the family is rising exponentially and hence making it more dominant.

Or prevent it from making future acquisitions? Inc.vapital Note HBS Case Collection January Revised October Tombstones This case consists primarily of excerpts from term sheets and prospectuses for six securities offerings made by US companies duringjust after the financial crisis and recession of The justification can be drawn from the diminishing returns for the last three kichenware.

Luehrman This case examines some parts of Stryker Corporation’s systems and procedures for approving and authorizing kifchenware spending of many different types, including buildings, machinery, and working capital for existing businesses, as well as transactions with third parties such as acquisitions, joint ventures, and licensing agreements.

Blaine Kitchenware Inc Exhibits Stephanie Zepeda | Stephanie Zepeda –

They also have to consider of the effect of the repurchase on various factors like the risks involved in raising a debt especially when they are large, very conservative and debt free. Seeing the industry debt equity ratio, the company has kept itself unlevered and this was a bit costly as the cost of debenture is fast cheaper if we compare it with the cost of equity. Cite View Details Educators Purchase.

Buyback of the shares using the surplus cash and issuing debentures is beneficial for the company as it will give some degree of leverage to the company. This shows that the company has been keen on less retention of money to further invest. Blaine Kitchenware, Inc is over liquid and under-levered. Finance General Management Marketing. The payout ratio of the company has been increasingly increasing for the past three years. Blaine has an unlevered capital structure currently i.


If you are the original author of this content and no longer wish to have it published on our website then please click on the link below to request removal:. The company has been earning profit and it should seek and endeavor further growth opportunities instead of returning it back to shareholders. Since they are totally equity financed, there is no tax shield. The Case Centre is a not-for-profit company limited by guarantee, registered in England No and entered in the Register of Charities No The debt capital has been procured at very less cost when compared to equity and hence the WACC has reduced from Their management will have increased stakes, this will reduce their chance of being acquired and this will provide more dividends to their remaining shareholders.

Cost of capital when the company is unlevered Ke All fields Reference no. Business and Environment Business History Entrepreneurship. Keep up to date with email updates Shipping options Terms of business What’s available from us?

Attention is also given to the value of interest tax shields. There are UK writers just like me on hand, waiting to help you. This page has approximately words. Technology and Operations Management. Finally, BKI had undertaken a strategy focused on rounding out strudture complementing its product offerings by acquiring small independent or the kitchen appliance product lines of large diversified manufacturers The company carefully followed changes in customer purchasing behavior and market trends.

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