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• Case | HBS Case Collection | March 2016 (Revised February 2019)

  Central European Distribution Corporation: Hostile Takeover, Bankruptcy Makeover

  Stuart C. Gilson and Sarah L. Abbott

  In early 2013, Central European Distribution Corporation (CEDC), a large publicly traded producer and distributer of vodka and spirits in Eastern and Central Europe, has suffered significant declines in its financial performance, is at risk of defaulting on its debt, and is under pressure from its largest shareholders to give them control of the board and to restructure its debt to avoid bankruptcy. The largest shareholder, billionaire Russian investor Roustam Tariko, has proposed an out of court exchange offer for CEDC's publicly traded bonds and investment in CEDC's stock that would give him full ownership of the company. If the exchange offer fails, the company will file for prepackaged Chapter 11 bankruptcy in the United States.

  Keywords: Hostile takeover; corporate governance; restructuring; Accounting restatement; Activist shareholder; Restructuring; Mergers and Acquisitions; Financial Statements; Corporate Governance; Investment Activism; Distribution Industry; Food and Beverage Industry; United States; Russia; Europe;

  Citation:

  Gilson, Stuart C., and Sarah L. Abbott. "Central European Distribution Corporation: Hostile Takeover, Bankruptcy Makeover." Harvard Business School Case 216-059, March 2016. (Revised February 2019.)  View Details

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• Teaching Note | HBS Case Collection | May 2018 (Revised February 2019)

  Greg Mazur and the Purchase of Great Eastern Premium Pet Foods

  Richard Ruback, Royce Yudkoff and Ahron Rosenfeld

  Teaching Note for HBS No. 211-085. Greg Mazur (HBS 1997) identified a small firm, Great Eastern Premium Pet Food, in December of 1998 that fit his search criteria and decided to offer the seller a cash price of $1.2 million plus an earn-out equal to 1% of revenue over the next five years. He planned to invest $500,000 of his own money in the acquisition and finance the remainder with a senior loan in a formal letter of intent.
  Great Eastern Premium Pet Food was a regional distributer of pet food products that operated in a highly competitive environment, with low profit margins, and no exclusive products. Great Eastern was barely profitable in 1997 and had profits of about $140,000 in 1998. Mazur evaluated the acquisition using a financial model that assumed a sales growth rate of 12.5% per year, and a gradual improvement in profit margin from 2% to 7.5% over five years. He identified ways to grow sales through changes in the composition and structure of the sales force and to improve margins through managing costs. The case explores the rationale for the acquisition and its evaluation, including the reasonableness of the financial model and its sensitivity to alternative assumptions.

  Keywords: Acquisition; Entrepreneurship; Financing and Loans; Negotiation Deal; Strategic Planning; Valuation; Analysis;

  Citation:

  Ruback, Richard, Royce Yudkoff, and Ahron Rosenfeld. "Greg Mazur and the Purchase of Great Eastern Premium Pet Foods." Harvard Business School Teaching Note 218-122, May 2018. (Revised February 2019.)  View Details

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• Teaching Note | HBS Case Collection | June 2018 (Revised February 2019)

  Home Nursing of North Carolina

  Richard S. Ruback, Royce Yudkoff and Ahron Rosenfeld

  In 2011, immediately after graduating HBS, Ari Medoff began a self-funded search for a small firm to buy and run as its CEO. After just three month of searching, he identified Home Nursing of North Carolina (HNNC), a home care agency based in Greensboro, NC, as a prospect and successfully negotiated a Letter of Intent in December 2011. HNNC was owned and run by a husband and wife eager to sell for personal reasons. It was an attractive target with recurring revenues and potential to grow. Medoff planned to finance 94% of the $3.6 million purchase price with debt from three sources: a bank loan, a seller note, and a loan from a group of individual investors. The remaining 6% came from Medoff’s personal wealth. The cash flow projections provided by Medoff indicated that investors’ debt would be paid in full in three years, well before the sellers’ seven-year balloon payment note matured.
  With just a few weeks until closing, the sellers asked to renegotiate the terms of the seller note that had been agreed to early in the acquisition process. The sellers asked for personal guarantees from the individual investors, something Medoff knew his investors would not agree to. Medoff attempted to negotiate modifications to the sellers' note that would offer more security but would not include additional personal guarantees. The modification also included a provision that would reduce the sellers’ note if HNNC failed to reach recent EBITDA levels. When the seller rejected this offer, Medoff was considering whether he should abandon the deal and either resume his search or switch to a more traditional employment path. Teaching Note for HBS Nos. 212-120 and 218-709.

  Keywords: small firms management; Acquisition; Negotiation Process; Investment; Small Business; Management; Personal Development and Career;

  Citation:

  Ruback, Richard S., Royce Yudkoff, and Ahron Rosenfeld. "Home Nursing of North Carolina." Harvard Business School Teaching Note 218-130, June 2018. (Revised February 2019.)  View Details

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