Fast Food Restaurants Case Analysis

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Globalization Strategies and Opportunities

Fast Food Restaurants

Student: Tecu Ioan Alexandru Teacher: Ioan-Constantin Enache

Contents

A. The market

B. Main Market Players

C. Mergers/Acquisitions/Takeovers that happened in the market

D. The Advantages of the vertical and horizontal integration

E. Chose a market player and assess the advantages and disadvantages of integrating another two companies (One horizontal integration and one vertical integration)

A. The Market

The hospitality industry is much broader
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Merger between Levy Acquisition Corp and Del Taco

In March 2015 Levy Acquisition Corp announced that will acquire the American fast food chain Del Taco for over 500$ million and will also cover their debt. Immediately after the merger, LAC decided to change its name to Del Taco Restaurants inc. and continued the trade on NASDAQ stock exchange.

In the first step (“Step One”), the Levy family, together with a group of investors brought together purchase $120 million of common equity of Del Taco and increased senior debt by $35.1 million through the use of an Incremental Term Facility and the Revolving Credit Facility under the existing Credit Agreement agented by GE Capital.
Under the terms of the investment, the proceeds of the equity infusion and the additional senior debt was used to retire Del Taco’s subsidiaries'.
$111 million Senior Subordinated Notes due 2019 and 2022, to acquire approximately $29 million of the existing equity in Del Taco from its current stockholders and to pay transaction expenses. This way LLI will own approximately 46% of the Company following Step One.

In the second step of the transaction (“Step Two”), a subsidiary of LAC will merge into Del
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The Advantages of the vertical and horizontal integration
The horizontal integration represents an acquisition of business activities with the same value chain in similar or different industries that has the purpose of growing the company size, increase product differentiation, to reach the economies of scale and to reduce competition.

The horizontal integration can be found in three different form:
a. Mergers, when two different companies join together and create one strong entity.
b. Acquisitions, when another company is being purchased.
c. Hostile Takeover, when a company that doesn’t want to be acquired is being taken over by an entity with a superior economic power.

Advantages of the horizontal and vertical integration between Burger King and Canadian Coffee Chain Tim Hortons.
The main goal of the merger was to increase the market power and also to give both companies an upper hand by joining resources and

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