Business Case Studies, Financial Management & Corporate Finance Case Study, Indage Vintners Limited

Code : FCF0018

Year : 2011

Industry : Information Technology

Region : USA

Teaching Note:Not Available

Structured Assignment :Not Available

Abstract: On April 28, 2010, United States of America based information technology company SoftSol Inc. (SS) announced the acquisition of its own country based company Ivon Inc. (Ivon), which was provider of smartphones powered by NetOS operating system at a price of $5.70 a share for $1.2 billion in an all-cash deal. It was a massive move that SS thought would reshape the mobile industry. The deal was supposed to give SS the access to Ivon's inbuilt software that could run phones and other type of devices like computer tablets and at the same time would give SS headway into one of technology's fastest growth segment. SS had realized that funds for the acquisition had to be raised from outside sources. Obtaining external financing was not much of a problem for SS, given that the acquisition of Ivon would add almost $400 million to the earnings before interest and tax (EBIT) in 2010. The company was facing the dilemma as to what was the best source of finance the company should use to finance the acquisition of Ivon. There was conflict of opinions among the members of board of directors of the company for this consideration. Hence this case study provides enough space to debate and discuss on the issues of possible sources of finance and using leverage optimally so that the value of the firm could be maximized.

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