...Wm. Wrigley Company Case Analysis Adrienne Johnson, Ramona Rhodes, Makpal Shotbassova Webster University FINC 5880: Corporate Finance FALL I TERM September 10, 2014 Author Note Certificate of Authorship: This paper was prepared by me for this specific course and is not a result of plagiarism or self-plagiarism. I have cited all sources from which I used data, ideas, or words either quoted or paraphrased. Introduction Blanka Dobryn is a managing partner of Aurora Borealis LLC. This hedge funds goal is to acquire a large stake in the Wrigley Jr Corporation. Once this happens then Aurora borealis LLC will encourage WM Wrigley Jr to reorganize the capital structure. The Wrigley Company at this point does not have any debt. Dobryn, is thinking that they can make this company more valuable if they raise their debt and use that money to either pay dividends or repurchase their stocks. (Brunner, 2010) Our job today is to find out the best way to go about restructuring the company using different financial strategies that will put the company at minimal risk. Effects of using debt to recapitalized In researching options, there are a few things that should be considered. Assuming that everything will be positive, there are great benefits to restructuring. The EPS would increase because there would be less shares outstanding after the buyback. The market would look favorable upon that, thus increasing the share price. If Wrigley is able to borrow at a lower rate...
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...WM Wrigley Jr. Company Group #2 Statement of the Problem: The William Wrigley Jr. Company was the world’s largest manufacture and distributor of chewing gum. They are an industry standard for international candy manufacturing and are competitive key players in the global market. William Wrigley Jr. originally founded the William Wrigley Jr. Company in Delaware as a partnership in 1891; it then became a corporation in 1903 based out of Illinois. The Wrigley’s company has been family ran up until recently when William D. Perez became president, CEO, and director. As of today, William Wrigley Jr. Co. corporate headquarters is located in Chicago, Illinois. Wrigley’s original two brands were Juicy Fruit and Wrigley’s Spearmint. These two brands are now a subsidy of the Mars Incorporated. Wrigley has since expanded, and it now owns a bunch of other brands, including Doublemint, Big Red, Winterfresh, Extra, Freedent, Hubba Bubba, Orbit, and Excel. Along with chewing gum, Wrigley’s offers mints, breath strips, and candies. Altoids, Crème Savers, Life Savers, and Velamints are some brands under Wrigley’s that offer these products. The company has done a good job of diversifying the amount of products that they manufacture. The Wm. Wrigley Jr. Company is a publically traded company in the New York Stock Exchange under the symbol, WWY As of 2006, Wrigley’s distributes to over 180 countries and has 15,800 employees worldwide (company website). The company manufactures...
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...9902224, 9081683, 9678513, 9253262 Financial Analysis Spring 2014 William Wrigley Jr. Company: Efficiently Financed or Financially Conservative? Introduction Blanka Dobrynin, a managing partner of Aurora Borealis LLC, is considering a potential investment in William Wrigley Jr. Company. Aurora Borealis LLC typically focuses on distressed companies that are in need of restructuring. Ms. Dobrynin believes that if Wrigley were to take on debt, it could create significant new value for the company. Ms. Dobrynin and her associate, Ms. Susan Chandler, have concluded that Wrigley could take on $3 billion in debt, assuming a credit rating between BB and B, at a yield of 13%; Ms. Chandler remains undecided on whether or not to suggest this $3 billion be used to pay an equivalent dividend or to repurchase an equivalent value of shares. Although leveraging a firm can create value, a detailed analysis is necessary to determine if doing so is the right path for Wrigley. The following analysis will evaluate the assumptions made by Ms. Dobrynin and her associate, examine Wrigley’s financial position under each alternative option, and provide suggested recommendations for Ms. Chandler to present to Wrigley’s board of directors. Key Issues Debt Rating: Ms. Chandler’s estimations regarding Wrigley’s credit rating may not be entirely accurate; therefore, the debt rating in which Wrigley should be categorized may not be BB/B. Each of the factors in Standard &...
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...benefits are estimated assuming that Wrigley commits to maintain the $3 billion in debt in perpetuity. * Debt grows from zero to $3 billion. * Assets grow by $1.2 billion, equal to the present value of the debt tax shields Book Value * negative as a result of the large payout under the dividend or share repurchase. * Market value of equity declines by $1.8 billion, the result of the payout of $3 billion, which is offset by the benefit of the debt tax shields ($1.2 billion). WACC after recapitalisation 1. Cost of debt: change from AAA (consistent with no debt) to a BB/B rating reflecting the higher risk Leverage & Unleveraged firm value $3 billion in debt * Use to buy back reduce the number of outstanding shares. Use this borrowed money to pay for dividend not affect the number of shares * Book value = total assets – (intangible assets + liabilities). Issuing more debt not affect the book value. * The price of a share will decrease by the amount of the dividend paid per share. Repurchasing shares of the company stock will not have an effect on the share price directly * EPS = EAT/Outstanding Shares EPS increase if number of shares reduce & EAT constant. * Issuing 3 billion dollars of new debt to pay dividends should not have any effect on the voting control of the Wrigley family. Using that money to buy back shares will have an effect on the voting right of the family Wrigley...
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...THE WM. WRIGLEY JR. COMPANY Team 14 November 19th, 2009 Contents Objectives 1 Management Summary 2 Item 1 2 Sub 1.1 2 Sub 1.2 2 Conclusion 2 Item 2 2 Sub 2.1 2 Conclusion 2 Item 3 2 Sub 3.1 2 Sub 3.2 2 Conclusion 2 Item 4 2 Item 5 2 Appendices 2 i. Objectives This report seeks to answer the following five questions about William Wrigley Jr.: 1. In the abstract, what is Blanka Dobrynin hoping to accomplish through her active-investor strategy? 2. What will be the effects of issuing $3 billion of new debt and using the proceeds either to pay a dividend or to repurchase shares on: a. Wrigley’s outstanding shares? b. Wrigley’s book value of equity? c. The price per share of Wrigley stock? d. Earnings per share? e. Debt interest coverage ratios and financial flexibility? f. Voting control by the Wrigley family? 3. What is Wrigley’s current (pre-re-capitalization) weighted-average cost of capital (WACC)? 4. What would you expect to happen to Wrigley’s WACC if it issued $3 billion in debt and used the proceeds to pay a dividend or to repurchase shares? 5. Should Blanka Dobrynin try to convince Wrigley’s directors to undertake the recapitalization? Management Summary Active Investor Strategy Blanka Dobrynin is a managing partner of the Aurora Borealis Company. The company utilizes a strategy called “Active Investor”. In this strategy, the firm looks for companies that could...
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...Shlensky v. Wrigley 95 Ill.App. 268, 237 N.E.2d 776 (Ill.App. 1 Dist. 1968) Facts William Shlensky (plaintiff) was a minority shareholder of the Chicago Cubs baseball team. Shlensky brought derivative suit against major shareholders, owner, and corporation for negligence and mismanagement. Major shareholder and president, Phillip Wrigley (defendant), owned about eighty percent of shares. Shlensky called for the installation of lights at Wrigley Field so night games could be scheduled because, his claim, that all other major league teams have already done so. Pursuant to Shlensky, the Cubs have not installed lights due to Wrigley’s claim that baseball should be played during the day as it is a daytime sport. Issue The issue is whether...
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...THE WM. WRIGLEY JR. COMPANY Team 14 Rado Oper November 19th, 2009 Contents Objectives 1 Management Summary 2 Active Investor Strategy 2 Effects of $3 Billion in New Debt for Dividend or Stock Repurchase 2 a. Outstanding Shares 2 b. Book Value of Equity 2 c. Price per Share 3 d. Earnings per Share 3 e. Debt Interest Coverage Rations and Financial Flexibility 3 f. Outstanding Shares 3 Wrigley’s Current Weighted Average Cost of Capital (WACC) 3 Debt Proceeds to Pay a Dividend or Repurchase Shares 4 Wrigley’s Recapitalization 4 Should Wrigley’s directors undertake the recapitalization? 5 Appendices 6 ⦁ Objectives This report seeks to answer the following five questions about William Wrigley Jr.: ⦁ In the abstract, what is Blanka Dobrynin hoping to accomplish through her active-investor strategy? ⦁ What will be the effects of issuing $3 billion of new debt and using the proceeds either to pay a dividend or to repurchase shares on: ⦁ Wrigley’s outstanding shares? ⦁ Wrigley’s book value of equity? ⦁ The price per share of Wrigley stock? ⦁ Earnings per share? ⦁ Debt interest coverage ratios and financial flexibility? ⦁ Voting control by the Wrigley family? ⦁ What is Wrigley’s current (pre-re-capitalization) weighted-average cost of capital (WACC)? ⦁ What would you expect to happen to Wrigley’s WACC if it issued $3 billion in debt and used the proceeds to pay a dividend or to repurchase shares? ⦁ Should Blanka Dobrynin try to...
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...by two teams in the NHL. It is hosted either on, or close to New Years Day. The Classic has been around since 2008. Ever since the NHL started this annual game, it has been held outdoors. In past years, the event has been held at famous venues, such as Fenway Park, Wrigley Field, and Citizens Bank Park. The Winter Classic is a very unique event, because the NHL actually builds a temporary ice rink on the respective fields each year. It is an incredible undertaking financially, so the NHL has be extremely good at financial planning to take on an event of this size and nature. Because the Winter Classic is an annual event, and has been going on for a few years, the NHL already has a relatively good idea of the kind of financial responsibility it takes to implement this event. It could be argued that they should begin to plan this event at least a year in advance. For the first half of the 2012-13 season, the NHL players association was in a lockout, so no games were played. The staff tasked with planning the 2013 Winter Classic had a pretty good idea that the event would not be held, but they still had to plan as if it was happening. This shows that it is important to start planning as early as possible, in case of any bumps in the road. When planning an event, possibly the most important thing to plan on is the financial aspect. Usually, the financial report after the event is the best way to tell if the event was successful or not. There are three steps or key practices...
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...TECNOLÓGICO Y DE ESTUDIOS SUPERIORES DE MONTERREY SEMINARIO INTEGRADOR DE FINANZAS Caso “The Wm. Wrigley Jr. Company: Capital structure, Valuation, and Cost of Capital” Profesor Titular: Dr. Roberto Joaquín Santillán Salgado Profesor tutor: Mtra. Karla Macías Yanin Guerrero Enríquez A01180790 29/Mayo/2014 Introducción Blanca Dobrynin, administradora asociada de Aurora Borealis LLC, propuso a Susan Chandler, una asociada, a iniciar la búsqueda de una inversión potencial en Wrigley. Aurora Borealis tenía un fondo de cobertura de 3 billones bajo administración y una estrategia de inversión que se enfocaba en empresas con dificultades, arbitraje de fusiones, transacciones de cambio de control y recapitalizaciones. El típico modelo de operación de Blanca Dobrynin consistía en identificar oportunidades para una corporación para reestructurarla, invirtiendo significativamente en el capital de la empresa objetivo, y encargarse del proceso de persuadir al administrador y directores de reestructurar. Chandler notó que el valor de mercado del capital común de Wrigley era de 13.1 billones. Dobrynin y Chandler discutieron de las condiciones del mercado de capital actual y decidieron enfocarse en el supuesto de que Wrigley podía pedir prestados 3 billones en una clasificación crediticia entre BB y B, con un rendimiento del 13%. La compañía Wrigley era el fabricante y distribuidor de goma de mascar más grande del mundo. La industria era intensamente...
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...chose Wrigley Field for this activity for many reasons. A few being I live right by wrigley and I spend a lot of time around it and for another I attended opening day 2013! I have always loved Wrigley Field since I was a child but until this class first lecture, I realized how much more there is to everything, especially Wrigley Field. I believe that since 1914 Wrigley Field in context is a geographical known place to eat, drink, be entertained and watch baseball. Wrigley Field as a baseball stadium is a context in which the use of it is influencing and being influenced by the activities going on around it. Wrigley field opening day, thousands of people walking in with their cubs attire on, already long lines for beer and hot dogs. These actions are non material and material traces that have been around since the beginning of Wrigley Field. Sitting in my seat I was looking at the Ivy wall which again not only an material trace of the past but also is a non material trace. It brings back memories of when it came to the cubs in 1916 ever since then helping to create non material memories for players playing there and for the fans. Opening day it created a memory when numerous times our left outfielders did not catch the ball and but it hit the ivy wall. Wrigley on opening day was great to be at that day because they were playing old cub announcements from the old days on the speakers. It made me really feel like there was a lot of history that happened in that field. Wrigley field...
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...Writing Effective Leads [pic] Five Ws and an H (or, finding a lead by emphasizing the most important news element): 1. WHO: President Clinton will visit Cuba next week at the request of Caricom nations. 2. WHAT: Lightning struck the upper deck at Wrigley Field last night while the Cubs were playing in San Francisco. 3. WHEN: Midnight tonight is the deadline for tax returns, but the local post office is ready to accommodate procrastinators. 4. WHERE: The Emerson and Towanda intersection is officially the most dangerous crossing in Bloomington, according to the Illinois Bureau of Transportation. 5. WHY: Because she could correctly spell "ostentatious," Lisa Wheeler will go to the state Spelling Bee finals. 6. HOW: By hitting his 50th home run last night for the fourth year, Chicago Cubs slugger Sammy Sosa etched his name in the baseball record books alongside Babe Ruth and Mark McGwire. Common Types of News and News-Feature Leads (more ways to "lead" the reader into the story) 1. Straight Summary Lead: Twenty-eight passengers and a crew of four were killed last night when a single-engine plane crashed four miles south of Bloomington. 2. Picture or Dramatic Lead: Mourners lined up for miles yesterday in the pouring rain to take one last look and lay flowers near the coffin of Mother Teresa, who lived among Calcutta's sick and needy for 35 years. 3. Background Lead: After two weeks of picketing, United Auto Workers put down their signs yesterday...
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...1. Complete a minimum 800 word paper analyzing today’s segmentation strategy for the Colgate-Palmolive toothbrush and toothpaste market. 2. Use the Precision toothbrush case study as both an example of a target market analysis and a good starting point for your Colgate-Palmolive toothbrush and toothpaste market evaluation. 3. The analysis should include: a. Evaluation of current geographic, psychographic, demographic and behavioral segmentation variables. b. Evaluation of current cultural, social and personal factors of the consumer market. c. Recommendations for market segmentation strategies. i. Does one segment look more promising than others? ii. Should one segment be dropped? iii. What factors support your recommendation? 4. Submit as a Word document via the WS2 CP Paper - Submit Assignments link. Title your document WS2 CP Paper. For more information on how to submit assignments see Workshop One. 5. For grading criteria, refer to the Paper Writing Rubric below. Market Segmentation a) Consumer markets are formed into segments based on descriptive characteristics: geographic, demographic, psychographic and behavioral. Geographic segmentation divides the market into nations, states, regions, counties, cities or neighborhoods. Demographic segmentation divides the market based on variable such as age, gender, income, generation, social class and life-stage. Psychographic segmentation is using psychology and demographics to understand the consumer...
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...CIO of this company, it is my job to look for opportunities to grow this company. An opportunity had come our way to be the sole supplier of micro beer in Wrigley Field, home of the Chicago Cubs, as well as get into 7 out of the top ten bars surrounding the ball park. It’s a great opportunity for a young company that would see tremendous growth from this expansion alone. The challenge is that the growth pattern goes against the current growth strategy put in place. The key is cost, and one of the biggest cost is advertisement which brings us to the use of Social Media. “ Through the use of Social Media, customers and prospects now have an almost instantaneous platform for discussion of their ideas, experiences, and knowledge.” Jeff Bullas This will be the key for me to try and change the mind of the Board. Word of mouth is one of the most inexpensive forms of advertising there is, and Social Media platforms allow us to get that rolling with very little cost. The rest of this proposal will consist of the plan that will show us how to accomplish plan the most economical, thorough way. Page 2. The How How will we accomplish such a feet. Well, it starts with presence. We can’t be make a name for ourselves unless we are smack dab in the middle of it. Setting up a regional office in Wrigley will be key, and allows us to keep a finger on the pulse of everything that is going on with our beer. As you can see there are many opportunities surrounding...
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...ACF The William Wrigley Jr. Company Group2 Ahsan Rashid Qazi 17110206 Sardar Noman Salim 17110210 M.Hasnain Shabbir 17110210 Jahanzaib Shoukat 17110286 Primary problems: This case is about The Wm.Wrigley Jr. Company, which has to incorporate debt into its capital structure and then decide between two alternatives of whether to Repurchase Share or to pay Dividend. In the wake of introduction of new products and foreign expansion, firm has to raise capital as suggested in the case of $3 billion debt, which will influence the Wm. Wrigley Jr. ‘s outstanding shares, shall it repurchase them or pay dividend to its shareholders. It also has to see the impact of this debt on the share price, the voting control of the Wrigley company, impact on EPS. Analysis: Impact on Share Price Before taking the debt the share price of the company was $56.37 with 232.44 million shares outstanding and a market value of 13.103 billion. After taking the debt of 3 billion, the market value increase by the amount of tax shield provided by debt i.e. $1.2 billion and the share price increases to $61.53. Impact on WACC The pre-capitalization WACC is 10.90% using beta= 0.75, Rf=5.65%, Risk Premium=7% The post capitalization WACC is 10.908% using Levered Beta = 0.87, Re= 11.74%, Rd=13% Impact on Voting Control Share repurchases results in less number of shares outstanding which increases the voting power of the Wrigley Family from 47% to 51%. Impact on EPS Before Recapitalization |...
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...questions. Figures in brackets printed down the right-hand side of pages indicate the marks awarded to each question or part question. ADVICE TO CANDIDATES You are advised to take account of the marks for each question in allocating the available examination time. This is a synoptic paper in which you are expected to demonstrate your understanding of the connections between the different elements of Business Studies. 4433 A2T21 Read the information below and answer the questions that follow. The Wrigley Company Ltd 1 The vision of the Wrigley Company is to have “Wrigley brands woven into the fabric of everyday life around the world”. In 1970 the company relocated its UK factory and head office to a 45 acre site in Plymouth in the South West of England. Over 600 staff are currently employed there. The factory’s continuous investment in the latest production technology ensures the business’ ability to innovate and maintain its global competitiveness. Wrigley markets its famous brands worldwide. Two of these brands – Wrigley’s Spearmint and Juicy Fruit – have been in existence for more than a century. Other brands include Doublemint, Life Savers, Big Red, Boomer, Pim Pom, Winterfresh, Extra, Freedent, Hubba Bubba, Orbit, Excel, Creme Savers, Eclipse, Airwaves, Alpine, Solano, Sugus, Cool Air, and...
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