AltaGas Ltd.: Acquisition of Decker Energy International
(5 pages of text)
In January 2012, Alberta-based energy infrastructure business, AltaGas Ltd. (AltaGas),was considering the purchase of U.S.-based green energy power producer Decker Energy International, Inc. The move into renewable energy and into the United States would be a departure for AltaGas, which was primarily focused on traditional energy and infrastructure businesses in Canada. The financial lead on the acquisition project was looking at the assumptions provided. His task was to value the U.S. power producer’s assets and provide feedback on issues that could affect the deal.
This case is designed for use in a finance course at both the undergraduate and graduate level. It illustrates the valuation of a business and the drivers of valuation. It also introduces the topic of sensitivity analysis. Students should be familiar with valuation methods such as discounted cash flow (DCF) and internal rate of return (IRR), which are used in the case. The case gives students an opportunity to
- conduct an assessment of a firm’s current strategy and future prospects;
- undertake a valuation of a firm using DCF and IRR; and
- assess the impact of various assumptions on valuation.
Canada, Large, 2012
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