This case gives students the opportunity to explore the effect of substantial free cash flow on corporate acquisition and
operating strategies. Students are also given the opportunity to extract information from the common stock prices of the participating
firms. A variety of valuation techniques are employed to assess the plausibility of a restructuring plan.
To demonstrate the process of a takeover and the way it works. To analyze the price of Kraft and the strategy of Philip
Morris to become the largest food company in the world.
1. How did the stock market assess Philip Morris’s $90 per share bid for Kraft?
2. Can Philip Morris finance the Kraft acquisition?
3. What is the value to shareholders of the restructuring proposed by Kraft?
4. What price should PM pay for Kraft?