Corporate Finance: Instructor\'s Manual Applied Corporate Finance

Aswath Damodaran 21

A Case Study: Kodak - Sterling Drugs

! Eastman Kodak’s Great Victory

Note the difference in stock price behavior of the target and bidding firms.

Note also the symmetry between premium paid over the market price at Sterling

Drugs ($ 2.1 billion) and value lost at Kodak ($2.2 billion). Kodak argued that

this merger would create synergy and that was why they were paying the

premium. The market did not seem to see any synergy.