This case is about EMERGING MARKETS
PUBLICATION DATE: June 18, 1996
Hostile Bid for Red October Case Solution
Manatep Bank, a Russian investment bank, has just announced the nation’s first hostile tender offer for Red October, a confectionery business located in Moscow. As the chief financial officer of the target company, Yuri Yegorov must determine what to recommend to the board of directors, and the way to respond, how much his firm is worth.
The context of the instance, the nascent Russian financial system, raises a variety of intriguing and complicated valuation problems for example determining discount rates in countries with unstable governments and high inflation, unclear property rights, and financial information that is inferior. The lack of institutional and monetary infrastructure provides a stark comparison to financial markets and takeovers in developed nations.
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