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Case analysis - Ust Inc. Debt Policy

About the author

student
Level
General public
Study
finance
School/University
sdsu

About the document

Published date
Language
documents in English
Format
Word
Type
case study
Pages
10 pages
Level
General public
Accessed
1 times
Validated by
Committee Oboolo.com
  1. Case summary
  2. The company
  3. Issues and risks
  4. Recapitalization
  5. Dividends
  6. Recommendations

UST Inc. is the dominating smokeless tobacco company in the market with over 75% of market share and 90% of sales coming from their tobacco products. Their declining market share poses a problem for the company. As a premium and leading brand, the company ignored lower priced competitors.

After losing 9% of their market share to price-value brands/competitors, they launched their own price-value brand named "Red Seal". This move was too late as they addressed the problem as insignificant early on. With declining market share, and pending litigations, health movements/reforms against tobacco, these aspects may negatively impact future cash flows and estimates. Even though smokeless tobacco is a much healthier alternative to cigarettes and has fewer litigation cases, UST Inc. has put most of its eggs in one basket by having over 90% of their sales come from their smokeless tobacco line.

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