Cyprus Minerals Company

ISBN 0-538-88783-4

Case Teaching Package
A case teaching package is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.

Length
This case is 10 pages in length and its case teaching package is 4 pages.

Abstract

While searching for acquisition opportunities, the Cyprus Minerals Molybdenum Team has discovered a European downstream molybdenum processor, Mueller-Gruenwald A.G. Acquiring the company would help Cyprus not only integrate vertically, but also gain access to the European market for molybdenum. Increasing distribution channels for molybdenum is particularly important as an over supply appears to persist in the market. Cyprus is focused on reducing costs and improving productivity and acquisitions like this provide the best opportunity for Cyprus.

The team is convinced that financing the acquisition as a project is preferable, but Cyprus’s treasurer wishes to use corporate financing to purchase the European firm. The case highlights the risks and benefits associated with both approaches to financing the investment. How will the team overcome the treasurer’s objections, minimize Cyprus’s exposure, and satisfy other potential partners in a project-financing deal?

Fit Within a Course/Linkages to Textbooks or Journal Articles

This case is intended for use with advanced undergraduate, graduate, or executive-education business students. It should be used in a class that focuses on the issues of project financing versus corporate financing in an international setting. The case addresses the challenges and risks associated with financing a project abroad.

Study Questions

1. Is the acquisition consistent with Cyprus’s objective of maintaining its po-sition as a world leader in moly?
2. Discuss the advantages of project financing for the acquisition. Why is project financing a better alternative?
3. Discuss the advantages of corporate financing for the acquisition. Is corpo-rate financing a better alternative?
4. Based on the previous analysis, is project financing a better alternative to corporate financing for the Mueller acquisition?