We are the consultants that focus on decision making for proposed acquisition, sharpen the company competitive edge and facilitate company’s growth in the long run. First Issue: Proposed Sales for Zubinos
Zubinos have to make a decision on sell off the shares to Whistle Coffee Bar (WCB) and consider the fairness of the price offered. Major shareholder: Mr Luis Zubinos is planning to sell off his entire family stake to WCB and consider the fairness of the price. Minor shareholder: Two options provided to the minor shareholders for decision making on their shares. Option 1: Sell off the shares
The shareholders whose are risk adverse and look for short term investment should sell off the shares to generate the profit on investment. Option 2: Hold the shares for future growth
The shareholders whose are risk taker and look for higher profit on investment can hold their shares for future growth. Recommendation
Mr Luis is advised to sell his entire shares since the share price offered is higher than market value. The minor shareholders are advised to make decision on their risk appetite for the sale. This is important because Zubinos is a high risk company and there is only one offer for the sale of shares currently. Second Issue: Appropriate Overseas Expansion Strategy Going Forward Zubinos is having a £1 million business loss because 30 loss making coffee shops in the expansion plan on Europe. The current expansion strategy is being considered and a new strategy is needed to be implementing for the expansion on future. Two options are develop based on different point on view from business management theory. Option 1: Franchising
Zubinos can expand through franchise because they can obtain the assistance from WCB. They can ask for the expertise to design and provide professional advice for the expansion plan. Through franchise, Zubinos can save cost and earn from the franchise right fees. Option 2: Open for new outlets
Zubinos expand through open the new outlets in other countries. Zubinos can have financial aids from the WCB if the acquisition is successful. Zubinos can also ventures into a blue ocean with the support and reputation of WCB. Besides, Zubinos can utilise WCB capabilities to create a new product for a niche market. Recommendation
Zubinos is advised to take option 1 as their expansion strategy since the company is high gearing and cannot open for new outlets anymore by utilise loans. Besides, the aid form WCB for franchise is favourable for Zubinos since WCB has the experience in this type of business ventures. Third Issue: Excessive Executive Pay
Zubinos is having excessive executive pay because this relate to the ethics and corporate governance. This issue is questioning whether the remuneration is fair to the shareholders and the recommendation for future remuneration package. Recommendation
Zubinos is suggested to implement corporate governance to ensure the company can concern on shareholders’ interest. Zubinos is suggested to refer to the UK Coporate Governance Code (the Code) for their reference to implementation. The option list in the Code is to implement Remuneration Committee for the future of the company.
Zubinos is a listed company in Alternative Investment Market (AIM) which established in 2001 by the founder Mr Luis Zubino. Zubinos business activity is sell fair trade coffee in their coffee shops and outlets. Currently, Zubinos has 60 coffee shops in the UK and 30 shops in Europe. Zubinos current shareholdings are owns by major shareholder Mr. Luis Zubino and his wife Ms. Vivien Zubino which is 51%. The remaining shareholding 49% is holds by minority shareholders of 100 persons. Zubinos current paid up capital is £3 million while the current share price is £18 per share. The P/E ratio of Zubinos is 8 times with a gearing ratio of 85%. Recently, Zubinos face a situation of proposed acquisition of Whistle Coffee Bar (WCB), appropriate...
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