brass Blog

You read in this issue’s Take Two column all about William Wrigley Jr. Company (NYSE: WWY). You might also have read that Wrigley has agreed to be purchased by Mars, Inc. with a little help from Warren Buffett. This announcement came after we went to press (Murphy’s Law, anyone?), so we asked the writers of the Take Two article what they thought about this new development.

Charles Worthman
Mars, Inc. recently agreed to buy William Wrigley Jr. Co. for approximately $23 billion, which equates to 4.1x revenue and 18.4x EBITDA. As per the Take Two column this May, this could be considered expensive. Yet it might not be expensive should Mars be able to reduce expenses via synergies.

Second, the merger with Mars will help head off competitive threats by giving the company more power to negotiate with vendors and by using Mars distribution channels and other resources.

Third, while growth is still an issue it becomes less so in a private company that might be content to simply milk the produce line without dealing with shareholders.

Finally, while brand loyalty is not as high in gums, Wrigley still could face competitive threats but will have more scale and more fire power to fight these threats especially on pricing.

Chris Lahiji
Whoa, what a turn of events.

Mars and Wrigley are teaming up to make the largest confection factory in the world, and one of the world’s greatest investors, Warren Buffet is financing a piece of it.

This is a great move because as the developing world is getting wealthier and wealthier, hygiene becomes important, and the cheapest way of improving your hygiene is by having great breath.

Seriously though, gum is anti-recessionary and so is candy.

Good move.

Thanks guys!

-Jennie