Société Lambert

In early 1994, senior managers and major shareholders of Sté Lambert, a medium sized privately held French company distributing automotive components, decided to put their company up for sale. Two of its major suppliers (Compagnie d'Equipments Electroniques and Société MCE) were interested in buying it to increase their own market shares. The two suppliers were competitors, neither wanting the other to gain more market share by buying Lambert. Lambert's management had recently over-invested in new facilities, which greatly increase debt; for tax reasons, they had been milking the company with the result that its apparent earnings were low. Both the buying and selling companies are considering several valuation methods besides a DCF approach.