Pan-Europa Foods S.A. Case Study

PAN-EUROPA FOODS S.A

Case Study

Mark Bucci

MGMT 555

1/30/2016

Summary

Pan-Europa Foods S.A., is a multinational producer of high-quality ice cream, yogurt,

bottled water and fruit juices. The company was founded in 1924 by Theo Verdin and the

company is headquartered in Brussels, Belgium. Their products are sold throughout various

Northern European countries. Over time, the company has grown and went public in 1979. By

1993 was listed for trading on the London, Frankfurt and Brussels exchanges. Pan-Europa has

also announced that its sales total from last year were nearly €1.1 billion. Out of their four

products, ice cream accounts for 60% of the company’s revenue, yogurt makes up 20% while

bottle water and fruit juices each make up 10%.

        Pan-Europa Foods S.A., sales have become stagnant which senior management

contributes to market saturation and low population growth in northern Europe. Members of

their management team are hoping to expand the company’s market presence and introduce new

products to boost sales. Hoping that this will increase their sales and improve the company’s

market value. The senior management committee is meeting shortly to draw up the company’s

capital budget for the new year. The committee of senior managers consists of five managing

directors, PDG (president directeaur-general) and the finance director. Eleven major projects

which total €208 million are to be considered. However, the Board of Directors has imposed that

a limit of €80 million is the cap to spend on the firm’s budget. Indicating that even with the €80

million limit, this would contribute to an increase of €656 million to the firm’s asset base. The

eleven major projects consist of new product introduction, acquisitions, market expansion,

efficiency improvements, preventive maintenance, safety and pollution control.

Questions & Recommendations

        Currently, Pan-Europa stock is at eight times their earnings, just below book value and is

lower than other companies in their industry. In order for Pan-Europa to avoid becoming a victim

of a hostile takeover, they need to adopt strategies that will look to increase their stock price,

which in return comes from increasing their gross sales and will come with innovation by