Milking Money out of Parmalat

Case Solution

Josep Tapies, Francesca Toninato

At Parmalat’s headquarters in Collecchio, Parma, top management desperately tried to save the group and negotiated with funds from LBO, Blackstone and KKR, as well as the investment banking arm of Deutsche Bank for a cash injection of three billion euros. At the end of 2003, the Parmalat Group was the eighth largest industrial group in Italy and probably one of the most international. With more than 37,000 employees, 139 production plants in 30 countries on five continents, sales of more than 7.6 billion euros at the end of 2002, an EBIT of around 600 million euros and a market capitalization of 2.3 billion euros , Parmalat was one of the most important. food processing companies in the world and a recognized leader in the production of UHT (ultra high temperature) milk. Few analysts had previously expressed doubts about the Group’s financial strength and none could imagine the scale of the financial problems that were soon discovered.

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