The Management Buyout of White Hen Pantry, Inc.
Posted: 7 Jul 1997
Date Written: 1995
Abstract
SUBJECT AREAS: Corporate restructuring; LBOs; valuation.
CASE SETTING: 1985, LBO in Convenience Store Industry.
Management of White Hen Pantry, a subsidiary of Jewel Stores, undertook a leveraged buyout of the subsidiary in 1985 with the assistance of PruCapital. The case focuses on the valuation of the subsidiary and the structure of the financing of the transaction. The case demonstrates how to construct cash flow forecasts, how investment bankers function, and how management of a subsidiary decided to undertake the LBO. The solution employs the Adjusted Present Value (APV) approach to analyzing WHP. We have used the case at the end of our first year core course, but the case can also be used in a course on corporate restructuring.
JEL Classification: G34, L81
Suggested Citation: Suggested Citation