Case ID: 201079
Solution ID: 2937
Words: 1164
Price $ 45

Ford Motor Companys Value Enhancement Plan A Case Solution

Case Solution

Ford Motor Co. announced recapitalization of firm’s ownership structure through a shareholder Value Enhancement Plan. In this plan, the company intended to distribute $10 billion of cash among the shareholders by giving them the choice between $20 cash and new common shares. The VEP also gives the Ford family access to common shares without diluting their 40% voting rights, who own 5% of total outstanding shares. Management is confident of the company’s performance and wants to get credit of their good cash flows by distributing it among shareholders. Moreover, most of the analysts have expressed optimism after the announcement of the Value Enhancement Plan. Lastly, the shareholders have strongly objected to the VEP since it favors the Ford family. The most important issue is that why the company is offering such a plan as opposed to traditional share repurchase or cash dividend. Why is the company distributing such a huge amount of cash? 

Excel Calculations

Questions Covered