Valuation of AirThread Connections - Brief Cases ________________________________________________________________________________________________________________ HBS Professor Erik Stafford and Joel...

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Answered Same DayJul 02, 2021

Answer To: Valuation of AirThread Connections - Brief Cases...

Neenisha answered on Jul 04 2021
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Air Thread Connections – Valuation
Background – American Cable Communications (ACC)
In December 2007, American Cable Communications had many investment banking proposals r
elated to mergers and acquisitions. ACC is one of the largest cable operators in United States. It covered 48.5 million households and had 24.1 million subscribers and 13.2 million internet subscribers.
However, American Cable Communications and AirThread were in communication of mergers and acquisitions. This would help both the companies to benefit from the combine synergies. American cable was having internet and video streaming facilities but did not have any kind of wireless service. However, wireless technique was prevailing in the market. There were many upcoming potential threats in the market which were emerging with the wireless technique. AirThread was also feeling the same pressure, however, it did not have internet or video streaming services.
Acquisition of AirThread by American Cable connections would have helped both the companies to expand the business. It would have helped to increase their customer base and get long term loyal customers. It would have also helped both the firms to improve their cost efficiency and utilization of network.
Hence, both the firms would have benefitted from the Research and Development facilities and the combined synergies.
Problem Statement
Given the merger and acquisition scenario, American Cable Connections had to value the share price of AirThread. Therefore, it was important to arrive at the correct valuation of the company.
Valuation
We have used 2 methods to value AirThread. First method used is Discounted Cash flow method. This method computed the value of the firm based...
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