Gum: Managing Brand Adolescence 1. Since William Wrigley Jr. established Wrigley chewing gum company in 1914‚ the company has been expanding for many years. Despite the company experience market downturn in the period of World War II and Cold War‚ Wrigley once again dominated the chewing gum market after the end of the war. Wrigley still dominated the chewing gum market with 50% market share. It can be said that before 2000‚ the development of Wrigley is very rapid and very successful. However‚ chewing
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its cash flow therefore it is a way to; a) Evaluate the Investment Decision b) Decide on a debt policy c) Appraise the performance of top managers 2) Compute the corporate WACC. Be sure to state all your assumptions to get the various inputs to the WACC. r_e=r_f+ β(EMRP) WACC= r_e (E/V)+ r_d (D/V)(1-t) E=Midland’s Equity Market Value D=Midland’s Net Debt (E/V)= Weight for the cost of equity (D/V)= Weight for the cost of V (E+D)= Midland’s total Market Value
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Global Candy Sales | | |Market Share |$ Sales in Millions | |Brand |Company |2011 |2012 |2011 |2012* | |Snickers |Mars Inc |1.7 |1.8 |$3‚286 |$3‚572 | |M&M’s |Mars Inc
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Skittles is a well-known‚ long-standing brand that has pleased consumers for generations. However‚ it is our contention that the name’s growth is stagnating‚ and needs to be revitalized based upon a core marketing goal: bring Skittles from simply a candy – something one consumes on a whim and forgets about – to a brand that engenders both value and feeling for consumers. With such a focus‚ the objective is to influence the seemingly minor consumer choice between confections in vending machines and
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PROBLEM BASED ON CHAPTER 15 – WACC AND THE HAMADA FORMULA Bickley Engineering Company has a capital structure of 30% Debt and 70% Equity. Its current Beta is 1.3‚ and its Market Risk Premium is 7.5% Points. The current Risk Free Rate is 3.5%. Bickley’s marginal tax rate is 40%. What is the Unlevered Beta of Bickley? Bickley’s management would like to change its capital structure to 15% Debt and 85% equity by retiring its bonds yielding 8%. The remaining long term debt will be at 7%. The
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Candy Production in the US‚ August 2012 (Market Share) Other 44.30% Mars Inc. 35.30% The Hershey Company 20.40% IBISWorld Industry Report 31134 Candy Production in the US Mars. Inc. Mars Inc. Market share: 35.3% Industry Brand Names Wrigley Skittles Starburst Juicy Fruit Airwaves Freedent Orbit Eclipse Big Red Mars Inc.-financial performance Year 2007 2008 2009 2010 2011 2012* *Estimate Revenue ($ million) 1‚800 2‚160 1‚908 2‚160 2‚232 2‚376 % change N/C 20.0 -11.7 13.2 3.3 6.5 Employees
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The Wm. Wrigley Jr. Company: Capital Structure‚ Valuation‚ and Cost of Capital Wm. Wrigley Jr. Company is a well-known leader that manufactures confections such as gums‚ mints‚ hard and chewy candies‚ lollipops‚ and chocolates. The company was founded in 1891 and its headquarters is based in Chicago‚ Illinois. It has operations in over 40 countries and distributes many of its world famous brand such as Double mint‚ Extra‚ Skittles‚ Orbit to more than 180 countries. Investment strategy of Blanka
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THE WM. WRIGLEY JR. COMPANY Team 14 Constantine Brocoum Courtney Delia Stephanie Doherty David Dubois Radu Oprea November 19th‚ 2009 Contents Objectives 1 Management Summary 2 Active Investor Strategy 2 Effects of $3 Billion in New Debt for Dividend or Stock Repurchase 2 a. Outstanding Shares 2 b. Book Value of Equity 2 c. Price per Share 2 d. Earnings per Share 3 e. Debt Interest Coverage Rations and Financial Flexibility 3 f. Outstanding Shares 3 Wrigley’s
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Wm. Wrigley Jr. Company: A Recapitalization Strategy Development Team: Sam Posnick Emily Booth Alex Fabisiak Sam Zarat 1 2 Scenarios To create a successful recapitalization plan‚ the group analyzed multiple scenarios and determined the appropriate level of debt to issue for the William Wrigley Jr. Company (referred to as Wrigley). The chosen capital structure is based on efforts to minimize the Weighted Average Cost of Capital (WACC) while also reducing increases in the cost of equity
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The Wm. Wrigley Jr. Company: capital structure‚ valuation‚ and cost of capital Teaching Note Synopsis In June 2002‚ a managing director of an active-investor hedge fund was considering the possible gains from increasing the debt capitalization of the Wm. Wrigley Jr. Company. Wrigley had been conservatively financed and at the date of the case‚ carried no debt. The tasks for the student are to: Estimate the potential change in value from relevering Wrigley using adjusted present value analysis
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