The overview is followed by a comparison of the financial performance of both the company. The financial performance of the company is analyzed by using different measures such as the ratio analysis technique and the comparison of the revenues and the profits of both the organizations. The value of Zetar plc is calculated so as to assess whether Zetar plc can be considered for acquisition purposes by Lindt and Sprungli. This valuation is performed using different methods such as the P/E ratio and the market capitalization concept. Finally, the valuation is used along with other arguments to suggest that the company is worth acquiring. This is further displayed by indicating the different advantages and the disadvantages that the merger/acquisition can bring. Both the advantages and the disadvantages are weighed before the final decision is given.
Company Background and Overview
Lindt and Sprungli is a group of confectionary company which is globally known for its high quality chocolate production. The company’s head quarter is based in Kilchberg, Switzerland. Lindt and Sprungli, more commonly known as Lindt is considered to be a global market leader with respect to the production of chocolates, its products are highly appreciated by people around the globe. The main markets that Lindt focuses on are highlighted below with respect to their Sales North America (28.3%) Germany (17.5%) Switzerland (12.7%) France (12.5%) Italy (11.5%) Great Britain (5%) Lindt’s success has been attributed to its long term strategy. The company’s focus and its main strategy revolves around its seven pillars; brand management, premium positioning, better bondage with customers, Innovation, marketing expertise, understandability of products and the company’s hunger for expansion. All these seven pillars are deemed to be the Critical Success Factors for the company and it is because of these long term strategies that the company gave an outstanding performance during an era of economic downturn (Lindt and Sprungli, 2010). “Zetar is a leading manufacturer of confectionery and natural snacks with a reputation for quality and product innovation” (Zetar Plc, 2011). Zetar plc is known for its good quality chocolate within the United Kingdom. The company’s main target markets are the children and for that reason they produce chocolates which appeal to children mostly. The company was incorporated on 8 December 2004 but its main business started in the year 2005. Zetar plc comprises of two groups, Confectionary Division and the Natural snack division. The confectionary division covers the production of chocolate which is later sold within the UK and other export markets such as Australia, China and Ireland. The natural snack division, on the other hand, manufactures and processes a wide range of nuts and dried fruits which are later sold within the UK market only. The natural snack division’s only market is deemed to be the UK market only. Zetar plc has developed a strong relationship with all the UK food retailers and it can be said that the company