AFM373 Lecture Notes - Lecture 8: Overwaitea Food Group, Net Present Value, Oshawa Group

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:james vaux associate director & greg (managing director) If takeover - need to act fast because grocery business is consolidating. How much money the company will make in the next couple of years. If it fits with their holdings so far (do they have the experience needed to deal with it now) Looking at the alternatives, against the criteria: quantitative and qualitative. Mature industry (increasing competition from grocers + non-traditional vendors like drug stores, wholesale clubs, etc. ) Lots of consolidation because cheaper to buy a competitor than open new stores (less risk of entering new market like lack of local knowledge, qualified workforce) Return on equity is not enough (restructuring, divesture of drug store operation & other things, expansion of retail & food service businesses. Loblaws financially able to bid, can get high financial gain from bid but may be subject to scutiny from competition bureau. Metro-richelieu would solidify position as largest grocer in quebec, gain national scope.

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