Mars Buys Wrigley for $23 B

123jump.com Staff
28 Apr, 2008
New York City

Wrigley has agreed to be acquired by Mars for $80 per share or $23 billion. The deal will be partly financed by Goldman Sachs and Berkshire Hathaway. Wrigley offer is 28% premium from Friday closing price. On the earnings front Humana reported revenue and earnings rise of 12%. RadioShack first quarter sales declined 4% and earnings fell to 30 cents per share. Royal Bank of Scotland is likely to eliminate 25% of its staff.

[R]9:30AM New York – Mars has agreed to pay a premium $23 billion to acquire Wrigley at a premium of 28%.[/R]

Mars has agreed to buy Wrigley ((WWY)) for $80 per share or $23 billion and Wrigley board of directors unanimously approved the sale.

Based on Wrigley''s closing share price of $62.45 on April 25, 2008, and its three-month weighted average share price of $59.88, this price represents a premium of 28% and 34%, respectively. This price also represents 4.3 times Wrigley''s 2007 net sales and over 35 times Wrigley''s 2007 earnings per share.

Mars, Inc, will acquire 100 percent of Wrigley''s outstanding shares and all of its outstanding options will be cashed out. The Wrigley Company will operate as a separate, stand-alone subsidiary, keeping its headquarters in Chicago.

Funding for the transaction includes approximately $11 billion from Mars, a $5.7 billion committed senior debt facility from Goldman, Sachs, and $4.4 billion of subordinated debt from Berkshire Hathaway, Inc. At closing, Berkshire Hathaway has committed to purchase a minority equity interest for $2.1 billion in the Wrigley Company subsidiary at a discount to the share price being paid to the stockholders of Wrigley.

Crude oil rebounded in New York trading on the expected strike at a BP refinery in the UK. Front month oil future of crude oil is up 58 cents to $119.10 a barrel.

On the earnings front Verizon, RadioShack, Humana and IHOP are few of the companies reporting earnings before the market opening.

Humana ((HUM)) reported revenue rise of 12% to $6.96 billion and earnings of 47 cents per share compared to 42 cents per share or earnings of $80 million compared to $71.2 million in the corresponding period in 2007.

RadioShack ((RSH)) reported first quarter sales decline of 4% to $949 million and earnings of $38.8 million or 30 cents per share compared to $42.5 million or 31 cents per share.

Royal Bank of Scotland ((RBS)) in a statement said that the there may be job losses at the company as it integrates recently acquired ABN Amro business. Separately Bloomberg reported that according to two sources the company is planning to lay off 25% of its staff or 7,000 people. RBS stock rose 1% to 350 pence in London trading.

Visa Inc ((V)) is trading 4% higher in Frankfurt, Germany ahead of earnings release after the market close. HSBC and JP Morgan raised their rating on the company stock and UBS assigned ‘buy’ rating to the stock. Visa is expected to earn 55 cents per share according to the consensus earnings reported by Thomson Reuters.

MasterCard ((MA)) is also expected to release its earnings after the market close. MasterCard is expected to earn $1.45 and $1.58 per share according to a survey of three analysts polled by 123jump.com.

In Tokyo Nikkei 225 Index closed higher 30.90 or 0.22% to 13,894.37, in Hong Kong Hang Seng index increased 149.51 or 0.59% closed to 25,666.29. In Australia ASX 200 index higher 15.40 or 0.28% to close 5,602.70. In Malaysia KL Composite index increased 7.23 or 0.56% closed to 1,295.31.

In South Korea Kospi Index decreased 1.51 or 0.08% to close at 1,823.17, in Thailand SET index closed higher 4.23 or 0.51% to 836.42 and Indonesia JSE Index edged increased 13.73 or 0.61% to 2,254.31. Sensex index in India decreased 110.02 or 0.64% to 17,015.96.