Case | HBS Case Collection | June 1991

Continental Carriers, Inc.

by W. Carl Kester

Abstract

A U.S. trucking company is considering using debt for the first time to acquire another company. The directors of the company are divided in their opinion of the likely impact of leverage on Continental Carriers' performance. Their differences must be reconciled and a decision reached about whether to issue new debt or equity to fund the acquisition. Students are introduced to the impact of leverage on performance variables such as profits, growth, earnings per share, and stock price. A rewritten version of an earlier case.

Keywords: Debt Securities; Financing and Loans; Acquisition; Borrowing and Debt; Equity; Transportation Industry; United States;

Citation:

Kester, W. Carl. "Continental Carriers, Inc." Harvard Business School Case 291-080, June 1991.