mars-wrigley...23 billion dollars?

Discussion in 'Economics' started by peilthetraveler, Apr 28, 2008.

  1. Anyone else think this is a bad deal?

    Wrigley has about 5.2 billion in assets (less than 1 billion in Net assets) and gross revenue of 5.3 billion. If you have 23 billion to spend, why not just spend 5 billion to create products to rival wrigleys and another 5 billion in the worlds biggest marketing campaign to sell your new products and save that 13 billion? Or at least use another 5 billion to buy wrigleys when its stock plummets 75% from less sales because of the new competition and there you go. You just saved 8 billion dollars.

    Just a random thought.
     
  2. interesting that the deal had to go thru Buffet...

    since Wall Street has fvcked their customers so many times... the bulk of the deal couldn't be floated at reasonable rates..

    maybe long rates will go back to 14% where they belong. until then, Buffet will be happy to finance the steals....
     
  3. This is Buffet's Depression hedge.
    He recalls the 30's when all people could afford was a stick of gum.

    It must bring back fond memories.
     
  4. the new 21st century depression will be when CNBC is forced to rerun episodes of McEnroe, commercial free.

    then, that is the bottom for all of this.
     
  5. Buffet's commission — 20% discount of the share price
     
  6. A few years ago Buffett valued the brand value of Coca-Cola at greater than $100 billion. This deal probably refects some of that thinking.
     
  7. Corey

    Corey

    I won't complain. Christmas comes early when you wake up to see a stock you own go up 20%+ in a day...

    Now, if only I could figure out a way to make it happen every day... ah well, I guess I can't be THAT lucky...

    :D
     
  8. If it was so easy to compete with Wrigley wouldnt someone else have done so to go after that $5 billion in revenues.

    It is like saying, instead of buying YAHOO just create another search engine web platform and get the same revenues and size in no time.

    Just because it is gum does not mean Wrigley is not a valuable company with strong earnings. Whether the price is too high depends on what multiple they are putting on the assets/earnings.

    But lets be real in that you cannot spend $5 billion and take out the leader entrenched in an industry with 30 - 50% of the markets in the US and in some places overseas.
     
  9. bad deal