Independence Aircraft: To Acquire or Not to Acquire?

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Abstract

Independence Aircraft is a manufacturer of aircraft and currently produces only long-haul aircraft. After a strategic review, Independence has decided to begin producing regional jets and sees an acquisition as the quickest way to enter this segment. The case requires students to value a potential acquisition target, perform a due diligence analysis, and provide a recommendation about whether Independence Aircraft should acquire Packard Aircraft. To perform this analysis and formulate a recommendation, students are provided the following: historical and forecasted financial information from Packard Aircraft; information about Packard’s products as well as data on historical and projected sales; and information about Packard’s customers, including which aircraft they buy, the number of units they are projected to buy in the future, and their credit ratings. The narrative of the case explains the strategic rationale for the proposed acquisition as well as the expectations and funding constraints that the Independence board of directors has imposed concerning the acquisition.

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