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Blue Water Foods Case

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Bluewater Foods Corporation
There are a number of questions that are brought up regarding the acquisition of County Chicken. One of the questions that is brought up in the case is whether 49 percent ownership in County would give them controlling interest and allow Bluewater to effectively manage County and help control the continuous supply of chicken to Bluewater. Carson questions if it would be necessary to purchase 51% rather than 49% in order to guarantee their controlling position. In considering the answer to this question I think it is important to understand which of the current shareholders will be selling their ownership. With the majority of County being owned by three individuals (23% each) and the remaining by 31% owned by 40 individuals, Bluewater may want to purchase the 51% controlling interest if the majority of the shares being sold are those of the 40 individuals owning 31% leaving the controlling position among the three majority shareholders. I think Bluewater could have issues if they do not purchase more than 50%.
With the current proposal from Bluewater to purchase 49% of County, the price per share would be $42. One thing the case does not address is how the purchase will Bluewater finance the deal. Based on the notes to the financial statements, Bluewater must maintain equity of $200 million. Beyond the financing of the deal, I think it would be wise for Bluewater to acquire County. County supplies Bluewater with 80% of their chicken supply and without the agreement and supply, Bluewater would not be able to obtain the chicken they need and they would ultimately not be able to offer chicken products.
From another perspective, I think County would be a great investment for Bluewater as I believe County is undervalued. The purchase of County’s quota for $6 million has a fair market value of over $46 million. While I think County would

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