The Timken Company
Top management of Timken hires you as consultants to perform an independent analysis and recommend the best, in your opinion, course of action in the proposed acquisition of the Torrington Company. Your task is to write a report that will address their questions and concerns, in particular: 1. 2. 3. 4. How does Torrington fit with the Timken Company? What are the expected synergies? What is your stand alone valuation of Torrington? What is your with-synergies valuation of Torrington? Should Timken be concerned about losing its investment-grade rating? How do Timken’s financial ratios compare with those of other industrial firms in 2002? How would those ratios change if Timken financed the acquisition with debt? 5. What is the price Ingersoll-Rand is likely to accept? Is Ingersoll-Rand likely to want a cash deal or a stock-for-stock deal? 6. 7. Should Timken go forward with the acquisition at all? If Timken decides to go forward with the acquisition, how should they structure the deal in terms of the price offered and the method of payment? What is the recommended bidding and negotiation strategy? Draw on as many arguments, methods and approaches as possible. Clearly explain all assumptions or judgements you make. Where applicable, refer to relevant theoretical concepts. Please note that even though this is a real business case, it is the quality of your analysis that will be marked, not how well your analysis and recommendation fit the actual subsequent developments.
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