# Case Study: Arcadian Microarray Technologies, Inc. Essay

1300 Words Feb 25th, 2015 6 Pages
FINANCIAL MANAGEMENT

CASE STUDY: ARCADIAN MICROARRAY TECHNOLOGIES, INC.

EXECUTIVE SUMMARY

As an investment manager from Sierra Capital Partners, Rodney Chu is interested in purchasing a 60% equity interest of Arcadian Microarray Technologies, Inc., a biotechnology firm. The bid is currently at \$40 million. The Arcadian’s managers have optimistic projections for their firms’ performance over the next 11 years.
However, based on Sierra’s calculations, come up a much more conservative view. With the request of Mr. Chu, a fair bid price could be calculated along with any appropriate counterproposals. Appropriate steady state growth rates and terminal values would be included and explained.

I. Objective
The main
Interpretation of Exhibit 6
Price to Earning Ratio

Price to Book Ratio

2.5. Driver of “g”
Constant Growth Rate
Options:
1. Real growth rate in the economy = 3% 2. Real growth rate in the Pharmaceutical Industry = 5% 3. USA Population growth = 1%

Nominal Rates 1. Nominal growth rate in the economy ~ 5% 2. Nominal growth rate in the Pharmaceutical Industry ~ 7% 3. USA Population growth = 1%

Best Rate: Nominal growth rate in the economy ~ 5%
Low Ran

Low Ran

High Range
High Range

2.6. Estimation of terminal values by using multiples and preparation of present value by using them

Estimating Terminal Value using: * P/E Ratio * P/BV Ratio * Constant Growth Rate

a. PRICE TO EARNINGS RATIO Arcadian’s View | P/E Ratio | 15 | 20 | Net Income 2014 | \$203 million | \$203 million | Terminal Value | 15 x \$203 million = \$3,045 million | \$4,060 million | PV of Terminal Value | \$3,045 million/(1+0.2)^10 = \$492 million | \$656 million | PV of 2005-2014 Cash Flow | \$(151 million) | \$(151 million) | Total PV | \$492 million - \$151 million= \$341 million | \$505 million |

Sierra’s View | P/E Ratio | 15 | 20 | Net Income 2015 | \$162 million | \$162 million | Terminal Value | 15 x \$162 million = \$2,430 million | \$3,240 million | PV of Terminal Value | \$2,430

## Related Documents

• ###### Corning Microarray Technologies Case Study Essay

no. 2-0020 Corning Microarray Technologies Greg Brown, general manager of Corning Microarray Technologies (CMT), finished delivering the bad news to his team. Through the first half of 2001, demand had plunged in the telecommunications sector, which accounted for 73% of Corning’s revenue. As a result, Corning could not sustain funding for the nascent CMT venture. He instructed the group that they would have to identify options for keeping the program alive with half or less of its current budget…

Words: 9219 - Pages: 37
• ###### Essay Case Study : Apple Inc.

Apple Inc., is an American technology company based from California. The company creates, develops and sells electronics, cell phones, software for computers and online services. The founder of the company is Steve Jobs. Jobs vision, dedication and love for electronics made him one of the most successful and savvy businessman in the world. Apple is one of the top brands in technology and electronics industry. People will stand in line for days, in order to purchase a new lunched Apple product. Apple…

Words: 1048 - Pages: 5
• ###### Essay Case Study: Apple, Inc

Case Study: Apple, Inc Assignment Questions 1. Does it make good strategic sense for Apple to be a competitor in the computer, digital music player, and mobile phone industries? Are the value chain activities that Apple performs in computers, digital music players, and mobile phones very similar and “compatible” or are there very important differences from product to product? Which of the three products lines —computers, digital music players, or mobile phones—do you think is most important…

Words: 1370 - Pages: 6
• ###### Essay Case Study : Apple Inc.

Prior to contrary belief, Apple Inc. was not founded by one person, it was actually founded by two. Steve Jobs, one of the most iconic faces of Apple was the man who took all the “claim to fame” but he was only one piece to the puzzle. Before the name “Apple” was a thought, Jobs knew that he needed a right hand man, one who knew and understood computer better than anyone. That man was best friend, Steve Wozniak. Jobs met Woz at a technology convention in California’s Melono Park, known as the Homebrew…

Words: 2003 - Pages: 9
• ###### Essay Case Study for Acuscan, Inc

Critical Case Study Assignment Maurine Shaughnessy GEN/480 Paul C. Moretti, M.B.A. September 12, 2006 I am the newly hired Vice President of Organizational Development. My responsibilities include creating the Organizational Development Department. I look forward to working with all of you especially with finding a new and improved product based on our already developed retinal scanning system iScanner. First of all I am going to discuss assumptions made by Kelly Thomas, Pat Lambert, Cliff…

Words: 1354 - Pages: 6
• ###### Essay Case Study : Fitbit Inc.

Introduction Company Fitbit Inc. is an American company that makes wireless wearable technology that tracks people’s activity. The devices measure number of steps, heart rate, quality of sleep, steps climbed, and other personal metrics. The company currently has seven different wearable watches. Fitbit also sells a scale which tracks your weight, BMI and body fat percentage. Below is a picture of all of Fitbits current products. Fitbit has a lot of competition within its space. Fitbits current…

Words: 934 - Pages: 4
• ###### Essay Case Study : Apple Inc.

Apple Inc. is a multinational corporation founded in 1976 by Steve Wozniak, Ronald Wayne and Steve Jobs that specializes in the development and manufacture of computer software, online services, and general consumer electronics. The company is headquartered in Cupertino, California and its main products include Macintosh computers, smartphones, tablets and portable media players. The company’s online services include iCloud, iTunes Store, and App Store. The computer softwares include OS X and IOS…

Words: 3567 - Pages: 15
• ###### Essay Magrec, Inc. Case Study

Running head: MAGREC, INC. CASE STUDY MagRec, Inc. Case Study Toni A Godwin Submitted to: Professor Tom Ramsey GM591 – Leadership & Organizational Behavior Submitted: May 17, 2011 Summary of the Case Study This case study involves MagRec, Inc., and the conflict caused by perceptions. This company produces magnetic recording heads, an essential device used for reading, writing, and erasing data on tapes and disks. Nine years ago, it was discovered that one of the parts to the…

Words: 1145 - Pages: 5
• ###### Essay Case Study : Apple Inc.

The company I choose to do my report on is Apple Inc. This company has been around since 1977 and its corporation is in California. On September 27, 2014, this Company owned 19.7 million square feet of building space in the U.S. This company also has building space in Europe, China, Singapore and Japan. This company designs, and produces mobile communication devices media devices, computer devices, and music devices. Apple’s products include the Iphone-one-two-three-four-four plus-six and six…

Words: 791 - Pages: 4
• ###### Essay Case Study : Inc. Case Study

MasTech Inc. Case Study Crucial Factors: • The steel contracts account for about 60% of the total cost. • In the production phase, suppliers are expected to provide defect-free products with JIT delivery. • MasTech won a bid to produce a cross-member part for the new frame of a new Ford truck model, & will be using Uxbridge as their steel supplier. • MasTech requires 130,000 tons of steel annually (260,000,000lbs) to complete the cross-member deal. • Steel is paid for in hundredweight (100lbs =…

Words: 1583 - Pages: