Valuation of Airthread Connections Essay

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Introduction This is a takeover report which will analyse American Cable Communications (ACC) decision-making of acquisition. ACC is one of the largest cable operators in the US by the end of 2007. The company provided video, internet and landline telephone service, but it did not have any kind of wireless offering. The cable industry has been developing enormously over the last decades because of the advances in technology, changes in regulation and shifts in competitive dynamics. In order to gain competitive advantage in the long run, ACC needs to become an aggressive acquirer. Air Thread Connections (ATC) is one of the options available to be acquired because of ATC owns greater technical resources in wireless service, and it is one of …show more content…
When the firm is valued without taking synergies, the total value of Air Thread connections should be computed by the sum of firm value as a going concern and value of investment affiliates. This is the same as the present value of ATC we calculated before. So the cost reductions, size effects and competitor reductions remain unchanged. The acquisitions generated synergies which including: operating synergies and financial synergies.

The estimation of the value of synergies is on the basis of two sources – reduction in backhaul costs as well as additional revenue generated by new wireless subscribers. In order to gain accuracy in the calculation of synergies, affect measurements, the discounted cash flow method (DCF Method) prefers to use. The Discounted cash flow method is based on the theory that the value of a company is the sum of future free cash flows discounted at the weighted average cost of capital. Based on the information showed in the Excel, the additional cash flow costs are saved 13.4 million, while the annual business revenue has increased by 704 million at end of 2012 and the value of company with synergy has increased from 7578.2 to 15993.3million. Therefore, based on these assumptions, the acquisition of

ATC is a beneficial project for ACC. Acquiring ATC can be beneficial in terms of operating and solving financial problems .ACC saved the operating
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