Consolidated Rail Corp Analysis - 1579 Words

Acquisition of Consolidated Rail – Case Study 1. Background Info - Conrail 1.1. Formed from the remains of the six bankrupt North-eastern railroads in 1973 1.2. Earned its first profit in 1981- $39.2m on revenues of $4.2bn. Privatised through an IPO in 1987 1.3. Major player in North-eastern cities and their connection with major Mid-western hubs 1.4. In 1995, had 23,510 employees, operated 10,701 miles of track and controlled 29.4% of the eastern rail freight market 1.5. Financial indicators- 1995 1.5.1. Operating revenue - $3.7bn 1.5.2. Operating ratio – 79.9% 1.5.3. Revenues per employee - $156,784 1.5.4. P/E ratio – 12.9 2. Background Info – CSX 2.1. Virginia based diversified transportation company – intermodal services, ocean†¦show more content†¦5.4. The backend offer would not materialise until late 1997, therefore the effective offer could be even less. If the cost of capital is 16.45% (more later), then the 60% shareholders will get $4.712bn/1.1645 = $4.04bn which effectively translates to $81.67/share ($3.03bn+$4.04bn/90.5m shares) 6. Transaction multiples 6.1. Have only look at transactions that have been completed. 6.2. The peer group is selected based on: 6.2.1. Comparable business risk – all the companies face on average similar risks. There could be some differentiation due to some firms operating in different parts but that does not affect materially. 6.2.2. Growth – the railroad industry is a mature industry and the growth is anticipated to come through acquisitions and no technological breakthrough is expected. 6.2.3. Profitability – on average Conrail appears to be profitable than the comparables and Conrail is less levered as well. 6.3. The average multiples are as follows: 6.3.1. EV to EPS – 19.4x 6.3.2. EV to Book value – 4.6x 6.3.3. EV to Sales – 2.2x 6.3.4. EV to EBITDA – 11.3x 6.4. The multiples give a valuation range of $91.85 to $148.23. The EPS and Sales multiples are close to the industry average giving a range value very close to the offer price - $91.85-$95.09. The EPS and Book value are very much affected by the leverage structure and thus may be not a true representation. 6.5. On the current offer, CSX is offering lower than the counterparts have offered in theShow MoreRelatedAnalysis of Financial Position of Smrt and Sbs Transit, Singapore7885 Words   |  32 PagesTable of Contents 1. Executive Summary 2. About the Company 2.1 Key People 2.2 Milestones 2.3 Business Structure 3. Company Analysis of SMRT Corporation Ltd. 4. Company Financial and Data Analysis 4.1. Profitability ratio 4.1.1 Return on Capital Employed (ROCE) 4.1.2. Operating Profit Margin 4.1.3. Profit Ratio 4.1.4. Return on Equity (ROE) Ratio 4.1.5. Return on Assets (ROA) Ratio 4.2. Liquidity Ratio 4. 2. 1. Current Ratio 4.2.2. 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