Wrigley Case Report

Case One

The Wm. Wrigley Jr. Company

Executive Summary

Aurora Borealis LLC is an activist Hedge fund. They are trying to buy a large stake in the multinational Wrigley Corporation and then force the management to reorganize the capital structure by raising debt and using it to pay dividends or buy back shares. The effect of restructuring on various financial parameters will be discussed in the concluding parts.

Xiao Wang, Suzzane Bonner, Alex Jackson, Tyler Eardley, Alex Zerber

Table of Contents

1. Shareholders Perspective……………………………………………………………………….3

2. Objectives of the Financial Policy…………………………………………………………………5

3. Flexibility …………………………………………………………………………………………6

4. Other issues to be brought to the attention of the CEO and the board…………………………….7

Refference list………………………………………………………………………………………..8

Appendix

FINANCIAL PLANNING PRINCIPLES AS APPLIED TO WRIGLEY CASE STUDY.....9

Book Values Pre-recap………………………………………………………………………10

Dividend Pre Re-Cap……………………………………………………,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,11

Share repurchase pre-recap………………………………………………,,,,,,,,,,,,,,,,,,,,,,,,,,,,11

Coefficient of Variation…………………………………………………………………….12

Earnings Per Share……………………………………………………………………….…13

Regression of Beta …………………………………..……………………………….………14

WACC………………………………………………………………………………………15

Benchmarks……………………………………………………….……………………….16

1.. Do you think Wrigley’s debt level subsequent to the $3 billion bond issue appropriate?

Why or why not?

Shareholders Perspective

From the shareholders perspective Wrigley’s debt level subsequent to the $3 billion bond issue was not appropriate for a number of reasons, especially the reason of...