Interco
Interco
What are your reactions to the roles played by in the Interco Situation by:
The board of directors of Interco was simply rejecting the City Capital offer because they were told to by their financial advisor, Wasserstein, Perella & Co. The board of directors acted accordingly, and had the best interest of Interco in the back of their minds. At the board meeting on August 8, the valuation range by the advisors came out to be $68-80 per common share of Interco. If the board of directors accepted City Capitals offer of $70 per share, they would have made a big mistake and they would have been criticized for it. They also adopted a shareholder rights plan that was designed to deter unsolicited takeover bids by creating the threat of substantial dilution for any person or group attempting an unfriendly merger with Interco.
The management of Interco was trying to take steps to help the weakening performance of the apparel group, because in the end it was hurting Intercos overall operations and was causing the equity markets to undervalue its common stock. Instead of talking about mergers, they decided to come up with a restructuring plan that included selling the apparel segment due to its poor performance and effect on the company overall.
Wasserstein, Perella and Co was Intercos financial advisor. By Interco expanding their mandate as financial advisor, they were now in charge of delivering an opinion on the fairness of City Capitals offer and valuing and recommending other alternatives. After their analysis of City Capitals offer,