Bruner Bruner Eades Schill Eades Schill Case Studies Studies Case Case Studies in Finance links managerial decisions to capital markets and the expectations of investors. At the core of almost all of the cases is a valuation task that requires students to look to financial markets for guidance in resolving the case problem. These cases also invite students to apply modern information technology to the analysis of managerial decisions. In the Seventh Edition, 25% managing forcorporate value creation of the cases are new with many dating from 2011–2012, ensuring that your students are learning from the most relevant and current sources. Visit the Online Learning Center at www.mhhe.com/bruner7e to see a complete list of changes to the Seventh Edition and to access study and teaching tools. Financein MD DALIM #1218056 12/10/12 Case Studies CYAN seventh edition MAG in Finance YELO managing for corporate value creation BLK seventh edition bru6171X_fm_i-l.qxd 12/11/12 3:01 PM Page i Case Studies in Finance Managing for Corporate Value Creation bru6171X_fm_i-l.qxd 12/11/12 3:01 PM Page ii ii Part One Part Title ii bru6171X_fm_i-l.qxd 12/11/12 3:01 PM Page iii Case Studies in Finance Managing for Corporate Value Creation Seventh Edition Robert F. Bruner Kenneth M. Eades Michael J. Schill bru6171X_fm_i-l.qxd 12/11/12 3:01 PM Page iv CASE STUDIES IN FINANCE: MANAGING FOR CORPORATE VALUE CREATION, SEVENTH EDITION Published by McGraw-Hill, a business unit of The McGraw-Hill Companies, Inc., 1221 Avenue of the Americas, New York, NY, 10020. Copyright © 2014 by The McGraw-Hill Companies, Inc. All rights reserved. Printed in the United States of America. Previous editions © 2002, 1989, and 1975. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of The McGraw-Hill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broad- cast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 0 DOC/DOC 1 0 9 8 7 6 5 4 3 ISBN 978-0-07-786171-1 MHID 0-07-786171-X Senior Vice President, Products & Markets: Kurt L. Strand Vice President, Content Production & Technology Services: Kimberly Meriwether David Managing Director: Douglas Reiner Executive Brand Manager: Charles Synovec Developmental Editor II: Jennifer Lohn Executive Marketing Manager: Melissa Caughlin Editorial Coordinator: Casey Rasch Director, Content Production: Terri Schiesl Senior Project Manager: Lisa A. Bruflodt Buyer: Nichole Birkenholz Media Project Manager: Prashanthi Nadipalli Cover Design: Studio Montage, St. Louis, MO Cover Image: Alija/Getty Images Typeface: 10/12 Times Compositor: Cenveo Publisher Services Printer: R. R. Donnelley Library of Congress Cataloging-in-Publication Data Bruner, Robert F., 1949- Case studies in finance : managing for corporate value creation / Robert F. Bruner, Kenneth M. Eades, Michael J. Scholl.––Seventh Edition. pages cm Includes index. ISBN-13: 978-0-07-786171-1 (alk. paper) ISBN-10: 0-07-786171-X (alk. paper) 1. Corporations––Finance––Case studies. 2. International business enterprises––Finance––Case studies. I. Eades, Ken M. II. Schill, Michael J. III. Title. HG4015.5.B78 2013 658.15––dc23 2012046392 The Internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill, and McGraw-Hill does not guarantee the accuracy of the information presented at these sites. www.mhhe.com bru6171X_fm_i-l.qxd 12/18/12 5:52 PM Page v The McGraw-Hill/Irwin Series in Finance, Insurance and Real Estate Stephen A. Ross Franco Modigliani Professor of Finance and Economics Sloan School of Management Massachusetts Institute of Technology Consulting Editor FINANCIAL MANAGEMENT Block, Hirt, and Danielsen Grinblatt and Titman Foundations of Financial Management Financial Markets and Corporate Strategy Fourteenth Edition Second Edition Brealey, Myers, and Allen Higgins Principles of Corporate Finance Analysis for Financial Management Eleventh Edition Tenth Edition Brealey, Myers, and Allen Kellison Principles of Corporate Finance, Concise Theory of Interest Second Edition Third Edition Brealey, Myers, and Marcus Ross, Westerfield, and Jaffe Fundamentals of Corporate Finance Corporate Finance Seventh Edition Tenth Edition Brooks Ross, Westerfield, Jaffe, and Jordan FinGame Online 5.0 Corporate Finance: Core Principles Bruner, Eades, and Schill and Applications Case Studies in Finance: Managing for Third Edition Corporate Value Creation Ross, Westerfield, and Jordan Seventh Edition Essentials of Corporate Finance Cornett, Adair, and Nofsinger Eighth Edition Finance: Applications and Theory Ross, Westerfield, and Jordan Second Edition Fundamentals of Corporate Finance Cornett, Adair, and Nofsinger Tenth Edition M: Finance Shefrin Second Edition Behavioral Corporate Finance: Decisions DeMello that Create Value Cases in Finance First Edition Second Edition White Grinblatt (editor) Financial Analysis with an Stephen A. Ross, Mentor: Influence Electronic Calculator through Generations Sixth Edition bru6171X_fm_i-l.qxd 12/18/12 5:52 PM Page vi INVESTMENTS Bodie, Kane, and Marcus Jordan, Miller, and Dolvin Essentials of Investments Fundamentals of Investments: Ninth Edition Valuation and Management Bodie, Kane, and Marcus Sixth Edition Investments Stewart, Piros, and Heisler Ninth Edition Running Money: Professional Hirt and Block Portfolio Management Fundamentals of Investment First Edition Management Sundaram and Das Tenth Edition Derivatives: Principles and Practice First Edition FINANCIAL INSTITUTIONS AND MARKETS Rose and Hudgins Saunders and Cornett Bank Management and Financial Institutions Management: A Financial Services Risk Management Approach Ninth Edition Seventh Edition Rose and Marquis Saunders and Cornett Financial Institutions and Markets Financial Markets and Institutions Eleventh Edition Fifth Edition INTERNATIONAL FINANCE Eun and Resnick International Financial Management Sixth Edition REAL ESTATE Brueggeman and Fisher Ling and Archer Real Estate Finance and Investments Real Estate Principles: A Value Fourteenth Edition Approach Fourth Edition FINANCIAL PLANNING AND INSURANCE Allen, Melone, Rosenbloom, Kapoor, Dlabay, and Hughes and Mahoney Focus on Personal Finance: An Retirement Plans: 401(k)s, IRAs, Active Approach to Help You Develop and Other Deferred Compensation Ap- Successful Financial Skills proaches Fourth Edition Tenth Edition Kapoor, Dlabay, and Hughes Altfest Personal Finance Personal Financial Planning Tenth Edition First Edition Walker and Walker Harrington and Niehaus Personal Finance: Building Risk Management and Insurance Your Future Second Edition First Edition bru6171X_fm_i-l.qxd 12/11/12 3:01 PM Page vii Dedication In dedication to our wives Barbara M. Bruner Kathy N. Eades Mary Ann H. Schill and to our children vii bru6171X_fm_i-l.qxd 12/11/12 3:01 PM Page viii About the Authors Robert F. Bruner is Dean of the Darden Graduate School of Business Administration, Distinguished Professor of Business Administration and Charles C. Abbott Professor of Business Administration at the University of Virginia. He has taught and written in various areas, including corporate finance, mergers and acquisitions, investing in emerg- ing markets, innovation, and technology transfer. In addition to Case Studies in Finance, his books include Finance Interactive, multimedia tutorial software in Finance (Irwin/ McGraw-Hill 1997), The Portable MBA (Wiley 2003), Applied Mergers and Acquisitions, (Wiley, 2004), Deals from Hell: M&A Lessons that Rise Above the Ashes (Wiley, 2005) and The Panic of 1907 (Wiley, 2007). He has been recognized in the United States and Europe for his teaching and case writing. BusinessWeek magazine cited him as one of the “masters of the MBA classroom.” He is the author or co-author of over 400 case studies and notes. His research has been published in journals such as Financial Man- agement, Journal of Accounting and Economics, Journal of Applied Corporate Finance, Journal of Financial Economics, Journal of Financial and Quantitative Analysis, and Journal of Money, Credit, and Banking. Industrial corporations, financial institutions, and government agencies have retained him for counsel and training. He has been on the faculty of the Darden School since 1982, and has been a visiting professor at various schools including Columbia, INSEAD, and IESE. Formerly he was a loan officer and investment analyst for First Chicago Corporation. He holds the B.A. degree from Yale University and the M.B.A. and D.B.A. degrees from Harvard University. Copies of his papers and essays may be obtained from his website, http://www.darden.virginia.edu/ web/Faculty-Research/Directory/Full-time/Robert-F-Bruner/. He may be reached via email at [email protected]. Kenneth M. Eades is Professor of Business Administration and Area Coordinator of the Finance Department of the Darden Graduate School of Business Administration at the University of Virginia. He has taught a variety of corporate finance topics including: capital structure, dividend policy, risk management, capital investments and firm valuation. His research interests are in the area of corporate finance where he has published articles in The Journal of Finance, Journal of Financial Economics,