Telepizza

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INSTITUTO INTERNACIONAL SAN TELMO

TELEPIZZA S.A.

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Case study by Instituto Internacional San Telmo (San Telmo International Institute) Research Division, Spain. Prepared by Professor Antonio García de Castro and Research Assistant Mrs Rocío Reina Paniagua for use as a basis of discussion and not as an example of adequate or inadequate management in aspecific situation. Copyright © April 2009. Instituto Internacional San Telmo, Spain. It is forbidden to copy this document, in whole or in part, without the written permission of Instituto Internacional San Telmo.

This document was drafted as a result of the contributions made by the sponsorship of the companies to which the Members of Instituto International San Telmo’s Department of Food andAgrarian Companies Advisory Board belong, which in April 2009 are: AECOC, AGRÍCOLA SAN MARTÍN, AGRO SEVILLA ACEITUNAS, C.C. CARREFOUR, CAJA RURAL SUR, CAMPOFRÍO ALIMENTACIÓN, S.C.A. OLEÍCOLA HOJIBLANCA, COVAP, COVIRÁN S.C.A., DIAGEO ESPAÑA, FIAB, FRIMANCHA INDUSTRIAS CÁRNICAS, GONZALEZ BYASS, PASTAS GALLO, HEINEKEN ESPAÑA, GRUPO YBARRA, INVERALIA, LANDALUZ, MAHOU-SANMIGUEL, MERCADONA, OSBORNE Y CÍA,GRUPO EBRO PULEVA, RABOBANK, RENDELSUR, S.A.T. ROYAL, BODEGAS WILLIAMS & HUMBERT.

SAN TELMO International Institute

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TELEPIZZA, S.A.1

BACKGROUND Leopoldo Fernández Pujals, who was well aware of the booming industry of home-delivered pizzas market in the USA, founded Telepizza company in 1987. Leopoldo held 45.45 per cent of the company, his brother, Eduardo, 32.35 per centand the rest of the share capital was distributed among a group of smaller shareholders. Telepizza opened its first store in Madrid, and then in other Spanish cities, and, in no time at all, became the market leader. On the other hand, it did not renounce its opportunity of international expansion and in 1995, the company set up stores in Portugal, Mexico, Chile and Poland. Eduardo sold his sharesin 1996 and a few months later, following a very successful advertising campaign in the press, a public offering of shares was arranged and 45 per cent of the share capital was placed in the Spanish stock market. Banco Bilbao Vizcaya, one of the most important national banks, bought 9.1 per cent of the capital, with several smaller shareholders continuing to hold 7.9 per cent and Leopoldo holdingthe rest. After its listing on the Stock Market, during two highly successful years, Telepizza shares became the highest valued among small investors, entering even the IBEX-35 2 . In November 1996, the company’s shares 3 were listed on the stock market at a price of 0.67 euros and in June 1998 they reached their maximum value of 9.92 euros; however, in 1999 the share price fell dramatically,reaching a minimum value of 4.10 euros. Exhibit 1 contains the projects that were started that year.

Case study by Instituto Internacional San Telmo, España. Research Division. Prepared by Professor Antonio García de Castro and Research Assistant Mrs Rocío Reina Paniagua, for use as a basis for discussion and not as an example of adequate or inadequate management in a specific situation. Copyright© April 2009. Instituto Internacional San Telmo, España. It is forbidden to copy this document, total o parcial, without the written permission of Instituto Internacional San Telmo. 2 IBEX 35: capitalisation-weighted stock market index listing the 35 companies with the highest liquidity ratio of those operating in the continuous market of the 4 Spanish stock exchanges (Barcelona, Bilbao, Madrid andValencia). 3 In 1996 the company had 240 million shares.

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SAN TELMO International Institute

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OCTOBER, 1999: THE BEGINNING OF A NEW PHASE In October 1999, the chairman and majority shareholder Leopoldo Fernández Pujals announced to the Board, the CNMV 4 and the market that he was selling his shares -30.2 per cent of the share capital- at a price of €4.6 per share....