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Case Study Assignment 2: USX Corporation Questions: 1

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Case Study Assignment 2: USX Corporation
Questions:
1. In 1986, then chairman and CEO David Roderick described USX as possibly one of
“the most restructured corporations in America.” Even so, Carl Icahn believed that
further restructuring of the company was still necessary. In late 1990, what operating
and/or strategic problems, if any, do USX’s two main businesses still face that would
warrant some form of additional restructuring?
2. Do you think there is any merit in Carl Icahn’s claim that problems in USX’s steel
business are depressing the value of its energy business?
3. Which restructuring option—Icahn’s spin-off proposal or the company’s targeted
stock proposal—will create the most value for shareholders? For creditors? For the
firm’s other stakeholders?
4. For what kinds of companies is targeted stock most appropriate? Least appropriate?
5. Should the company seriously consider any other options besides doing a spin-off or
issuing targeted stock?
6. If the company decides to go ahead with the targeted stock issue, what specific
provisions or features should the stock include to ensure maximum value creation?
How closely would you model USX’s targeted stock on GM’s alphabet stock?