Posted: December 4th, 2013

Santori Restaurants – possible acquisition by Grande Experience Restaurants

In October 2013, Philippe Grenier was considering the purchase of the Santori restaurant chain.
Philippe was the director responsible for business development of Grand Experience Restaurants (GER), a privately-owned company with 17 restaurants situated across the larger suburbs of Paris, France.
Assignment:
Before deciding what he should do, Philippe Grenier has asked you to prepare an independent report for him, to give a second opinion on his own calculations and ideas.
He has asked you to:
1. Calculate the underlying value of the Santori chain as a standalone business using the Discounted Cash Flow approach. GER applies 8% discount rate to its projects.
2. Comment upon and calculate the synergies which GER might be able to achieve if the Santori group was under GER ownership.
3. Advise GER on what price they should offer to the Faverein brothers, with a careful explanation of your logic.
4. Comment (with carefully explained reasons) on whether, if GER were to buy Santori, they should:
a. …continue with Santori’s sponsorship of one of France’s top professional football teams
b. …continue with Santori’s policy of employing only staff with strong family links to North Africa
c. …continue with Santori’s policy of selling only fish procured from sustainable sources.
Notes and suggestions
1. Please submit your answer in Word. This is a 1,500-word individual assignment and represents 40% of your mark for this module.
2. In questions 1 and 2, show your calculations and state your assumptions clearly. It is important that you come up with a valuation of the Santori group and the synergies which could be achieved if under GRE’s management as the basis for your response to question 3.
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3. Use the textbook (Hillier et al) to remind you of the key concepts, including how ‘synergy’ works.
4. Question 4 goes beyond the technical parts of the case study: explain your points carefully and justify your conclusions, based on the critical analysis approach we have used in class. If you can, point out both sides of any possible debate in your answer. Use supporting evidence, properly referenced, if and where appropriate. Remember, you’ll be rewarded for the quality of your critical analysis – there is not necessarily a ‘right’ answer.
5. Don’t work with other students in compiling your estimates! This counts as collusion/plagiarism and cannot be credited. It’s fine to discuss with your colleagues how to approach the work, but once you’ve started on preparing your answer you should work alone.
6. Distribution of marks: This assignment is measured against LO1 and LO3 (see module guide). The rubric published on Moodle should be your guide to how I will be distributing marks – make sure you read this and have addressed all aspects of the assignment.

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