Corporate Finance Case Study

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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?

6- Would you recommend to the Italian State that:
c. Prior to the disposal, it performs an audit of the Roberto group and discloses the findings to potential buyers? d. Or that it waits until negotiations with the buyer have been completed before the latter performs due diligence procedures, adding a provision to the contract under which the price will be revised based on the findings of this audit. e. Or that no audit be performed before, during or after the disposal? Why?

7- Given the pronounced differences between the Roberto and Chez Léon chains and the difficulty of finding a buyer prepared to acquire both businesses, would it be preferable to arrange a sale by compartment or as one block, leaving the buyers to form consortiums and divide the businesses between them? Why?

8- Since Olivetti wants to sell its 45% stake in Chez Léon, would it be in the interest of the Italian State to buy this stake before the group is put on the market so as to present a streamlined structure? Or would it be preferable to leave things as they are? Why?


1. Executive summary

In the above case study Roberto Group incepted 30 years ago by IRI one of the largest holding companies by the Italian government. is being planned to be sold out by the Italian state. 2.
In a few phrases, describe the situation of the Roberto and Chez Leon chains.
The Roberto Group was launched in 1973 and had a thrilling success, which wasn’t maintained for a long time and it started showing the signs of failure in the next decade. To counter the competition Chez Leon was bought by the Roberto Group and was expanded successfully throughout Italy. 45% of Chez Leon was bought by Olivetti so that the public sector entity could be financed. There had been numerous management shuffles and with increased competition the Roberto chain suffered heavy losses which resulted in Italian State assessment to sell it. In 2001 the Agnelli group was prepared to buy the Roberto chain at 500 Million Euros. But this opportunity was denied by the anti-trust authorities, which were not willing to relinquish catering sector to a particular group as the group already had a stake of 27% in Pietro (the market leader and the largest competitor of Roberto).

At present i.e. 2003 the asking price for Roberto was considered to be too high at 500 million Euros, as Roberto chain situation have been aggravated and Chez Leon is not a cash cow any more, even if it is still making honorable profits. But the various parties like Nico Ricci and the French group Flo were interested in the buyout of only Chez Leon while the others like former Olivetti executive and the two private equities and venture capital groups were interested in poor performing Roberto chain. Finally, none has been interested in buying both the entities of Roberto Group.

Roberto chain suffers slow decreasing change in market share during 1998-2006 and reaches around 2.5% of the market share as compared to more than 5% in 98. Net profit goes to negative after 2002 which further aggravates the situation.

Chez Leon kept a leading position in the theme restaurant market before the mid of 2006, but in the mid 2006, it...
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