Prepared by Lisa Simth
October 18, 2010
Euroland Foods S.A. Case Analysis
Euroland Foods Company was a publicly traded company since 1979. Theo Verdin founded the company in 1924 as a result in developing his dairy business. Euroland Foods Company saw itself as a multinational producer. The four products were high-quality ice cream, yogurt, bottled water, and fruit juices. Each product accounted for 60%, 20%, 10%, and 10% of the company’s revenue respectively. The company’s headquarters was in Brussels, Belgium. Since the day the company was founded, it has experienced steadily development. II. Background of Firm
The board of directors of Euroland Foods Company had 12members. Three of them were the Verdin family, four of them were from the management, and the left five members came from outside. The combined Verdin family, the combined company executive, Venus Asset Management, and Banque du Bruges et des Pays Bas were the four biggest stockholders. Each had 20%, 10%, 12%, and 9% of the company’s shares outstanding respectively. Senior Management Committee was responsible for the capital budgeting and presenting it to the board of directors every year. Seven members, including five managing directors, one PDG, and one finance director, were on the committee. III. Statement of Situation
Euroland Foods Company had two major problems comparing with its peers. One was the high debt-to-equity ratio, another one was the low price-to-earnings ratio. The debt-to-equity ratio was 125%, which made the Banque du Bruges, Euroland’s bank, could not keep silence. Banque du Bruges strongly pushed a debt reduction program to Euroland. No project could be financed if the leverage level was beyond the current debt-to-equity ratio. The lower the price-to-earnings ratio, the lower the stock price was. In this case, the Euroland’s stock price was lower than average of peers. At the current ratio 14, Euroland’s market...