Weighting: 40%
It is early 2016 and you are operating as an adviser to Tesco plc who is considering acquiringJ Sainsburys plc. You are required to submit areport to the Board of Tesco containing the following items:
1. An analysis of J Sainsburys plc within its industry context, this should include normalised financial statements and ratio analysis.(15 marks)
2. Analysis of the current (as of 2015) economic climate and industry performance
(15 marks)
3. A valuation of J Sainsburys plc (expressed as a price per share, P0) using as many different methods as you can (using the providedannual report). Your valuation should also include analysis of the valuation techniques used. (50 marks)
4. The maximum price at which Tesco plc should bid for J Sainsburys plc(with justification)
(5 marks)
5. Outline any possible hurdles you may see in the way of Tesco plc successfully making the purchase and integrating J Sainsburys into thegroup. (10 marks)NOTES:
There is no one correct answerhere; as such you can score heavily with a range of values so long as the assumptions that went into thecalculations are stated and reasonable.
Report format is required and 5 marks are available for the overall feel or look of the report. This includes layout, structure, formality ofwriting, etc.
Your spreadsheet model should be submitted as an appendix to the report and on a CD/memory stick so it can be reviewed.
Obviously you are able to look at historical P0 values for J Sainsburys, dont be concerned if your valuations are a long way off, just try toensure that your assumptions are valid and your calculations accurate. You are not graded on how close to actual share price your valuationsare.
Requirements 1, 2 &5 must not exceed 2,000 words in total and it is anticipated that each of the three components will be at least 500 words.
Academic referencing is not required however when using or quoting figures you need to state their origin.