Corporate Finance Case Study

3498 WordsMar 1, 201114 Pages
ROBERTO Ristorante 1- In a few phrases, describe the situation of the Roberto and Chez Léon chain. 2- Without the Chez Léon chain, would you think that the Roberto chain has a positive, nil or negative value? 3- What are the foundations of value for Chez Léon? 4- Given the objectives of the Italian State, would you recommend that the sale be completed: a. On an open bid basis? b. Via a private negotiation, selecting the most obvious candidates? Why? 5- Once you have selected the procedure, is it necessary to set a minimum price for the Roberto group below which, to safeguard the interests of the Italian State, it will not sell its stake in the group? Why?…show more content…
3. Without the Chez Leon chain, do you think that the Roberto Chain has a positive, nil or negative value? Why? Without the Chez Leon chain the Roberto group will be having a negative value similar to the way it is having at present. But combined with Chez Leon it is also showing negative income. The profits at Chez Leon, which are declining continuously, are unable to offset the heavy losses incurred by Roberto chain Roberto Chain Million euros | 2002 | 2003 | 2004 | 2005 | Sales | 240 | 199 | 170 | 160 | Exceptional Items | 300 | -10 | -10 | 0 | Net profit | 220 | -106 | -79 | -80 | Chez Léon Million euros | 2002 | 2003 | 2004 | 2005 | Sales | 205 | 215 | 200 | 175 | Exceptional item | 0 | -10 | -10 | -10 | Net profit | 50 | 25 | 10 | 10 | The above tables clearly show that Chez Léon profits are unable to cover Roberto’s losses 4. What are the foundations of value for Chez Léon? Earlier, as a solution facing the competition and to expand in the country where the Roberto chain wasn’t implemented, the Italian State had bought the Chez Léon chain. There were nearly no competition in Italy against Chez Léon chain, in fact it is a mix of French and Belgian cuisine. This chain was especially developed in places such as North Italy, where Roberto couldn’t expand because of the competition there, therefore Roberto chain was stuck in southern whereas Chez Léon was expanding. But as Roberto’s equity carves out, the

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