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    M&M Pizza

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    susana3gamito
    Moe Miller is the new managing director of M&M Pizza in Francostan who wants to make his mark by changing the company's financial policies. He proposes issuing new debt to repurchase shares, which would increase dividends per share without changing operations or profits. The case also provides background on Francostan, a small, politically and economically stable country.

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    M&M Pizza

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    susana3gamito
    1K views1 page
    Moe Miller is the new managing director of M&M Pizza in Francostan who wants to make his mark by changing the company's financial policies. He proposes issuing new debt to repurchase shares, which would increase dividends per share without changing operations or profits. The case also provides background on Francostan, a small, politically and economically stable country.

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    Moe Miller is the new managing director of M&M Pizza in Francostan who wants to make his mark by changing the company's financial policies. He proposes issuing new debt to repurchase shares, which would increase dividends per share without changing operations or profits. The case also provides background on Francostan, a small, politically and economically stable country.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    1K views1 page

    M&M Pizza

    Uploaded by

    susana3gamito
    Moe Miller is the new managing director of M&M Pizza in Francostan who wants to make his mark by changing the company's financial policies. He proposes issuing new debt to repurchase shares, which would increase dividends per share without changing operations or profits. The case also provides background on Francostan, a small, politically and economically stable country.

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    © All Rights Reserved
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    of 1

    T DI Kl

    DARDEN

    UVA-F-1691

    BUSINESS PUBLISHING

    Rev Jan 26,2016

    PIZZA
    Twenty-nine-year-old Moe Miller had recently been appointed managing director
    at
    M&M Pizza, a premium pizza producer in the small country
    of Francostan. As a third-generation
    director of M&M Pizza, Miller was anxious to make his mark
    on the company with which he had
    grown up. The business was operating well, with full penetration of the
    Francostani market, but

    Miller felt that the financial policies of the company were overly
    conservative. Despite
    generating strong and steady profitability of about FSJO_0nillion-peryear
    over recent memory,
    M&M Pizza's stock price had been flat for years, at about FS25 per share. I

    His new office, Miller discovered, had an unobstructed view of the nearby marble
    quarry'.
    How wonderfully irrelevant, he thought to himself as he turned to the financial analysis his
    on
    desk. With borrowing costs running at only 4%, he felt confident that recapitalizingthe balance
    sheet would create sustained value for M&M owners. His plan called for issuing FS500
    million
    in new company debt and using the proceeds to repurchase FS500million in company shares.
    The plan would
    profits, and operations of the business unchanged but allow M&M
    to borrow at the relatively lovs prevailing
    on debt and increase dividends per share.
    Committed to raising the share price, Miller felt it was time to slice up the company's capital
    structure a little differently.

    Francostan
    The Mediterranean island nation of Francostan had a long tradition of political and
    economic stability. The country had been under the benevolent rule of a single family for
    generations. The national economy maintained few ties with neighboring countries, and trade
    was almost nonexistent The population was stable, with approximately 12 million prosperous,
    well-educated inhabitants. The country was known for its exceptional IT and regulation
    infrastructure; citizens had unrivaled access to business and economic information. Economic
    policies in the country supported stability. Price inflation for the national currency, the Franco
    FS = Francodollars.

    This case was prepared by Michael J. Schill, Associate Professor of Business Administration It was written as a
    basis for class discussion rather than to illustrateeffective or ineffective handlingof an administrativesituation.
    Copyright @ 2013 by the University of Virginia Darden School Foundation, Charlottesville, VA. All rights reserved.
    No part of this publication may be
    To order copies, send an e-mail to
    reproduced stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means
    electronic, mechanical, photocopying, recording, or otherwisewithoutthe gvmission of the Darden School
    Foundation.
    Rat f

    cas
    . centre

    239SuS

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