The Wm. Wrigley Jr. Company

|Hofstra university |

|THE WM. WRIGLEY JR. COMPANY |

|FIN209 Case Analysis |

| |

|Yang Liu 701407633 |

|4/28/2011 |

| |

1. Case Main Problem: The WM. Wrigley JR. Company should change the recapitalization of its capital-market conditions and find the differences wherein hidden threats and opportunities lay.

2. Case Analysis Steps:

1) Review the extra dividend and stock buyback through new debt of the leveraged recapitalization.

2) Review the WACC and EPS versus EBIT analysis of Wrigley.

3) Review the impact on WACC and new recapitalization.

3. Case Analysis Issue:

1) Review the extra dividend and stock buyback through new debt of the leveraged recapitalization.

According to the case, William Wrigley Jr. Company had 232.441 million shares outstanding and the marginal tax rate was 40%, reflecting the sum of federal, state, and local taxes, but there is no debt in its capitalization.

Now assume Wrigley make 3 billion as new debt to pay an equivalent dividend, then the extra dividend per share will be 3 billion / 232.441 million=...