Business Case Studies & Business Publications

Effective "Estée-te" Tax Planning throug...

Frank, Mary Margar...

Case

Effective "Estée-te" Tax Planning through Financial Engineering: Estée Lauder Companies, Inc.

Frank, Mary Margaret; Pozzi, Michael

C-2261 | Published July 17, 2007 | 17 pages Case

Collection: Darden School of Business

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Product Details

This case examines the creative strategies that the Lauder family used to monetize its position in Estée Lauder Companies, Inc., in the 1990s while deferring its tax liability on the appreciated position. Strategies included the use of the company's IPO to engage in a short-against-the-box transaction and the issuance of hybrid securities known as TRACES. The case allows students to consider a variety of monetization strategies and the tax and nontax consequences of those strategies. Students are also exposed to estate tax planning, taxation of derivatives, and tax risk issues.