2. As a member of the Board of Interco, neither the …show more content…
Upon further analysis, whereby we adjusted for the appropriate growth rate and profit potential of the Apparel division, we have determined that a more accurate valuation range for Interco is $61 - $70/ share. See Discounted Cash Flow Analysis #2 for a revised discounted cash flow analysis and stock value range. As a result, we would advise the board to accept City Capital’s offer based on (i) our revised analysis, (ii) due to the fact that there are no alternative bids for the company and (iii) the risk associated with management’s restructuring plan.
5. The Board - When the Board hired Wasserstein, Perella, & Co. to stop the Rales brothers it appears it neglected its fiduciary responsibility of the shareholders and worked instead in its own best interests. Instead of attempting to understand the reason for the takeover and analyzing the pros and cons of a potentially friendly merger, the Board threw up an automatic roadblock.
The Board is primarily comprised of Interco's top executives - out of the 14 named directors, only seven are independent shareholders who are not employed by Interco or one of its subsidiaries or divisions. The Board initially instituted certain "poison pill"