The following assessment addresses the proposed merger of the Wm Wrigley Jr. Company (Wrigley) and Mars, Incorporated (Mars). Through analysis of the various factors presented in the case including the companies’ cultures, the global competitive landscape, and macroeconomic trends, it is our intention to support our recommendation to the Wrigley board to proceed with negotiations.
2 BACKGROUND
Wrigley is a confectionery producer of chewing gum, chocolate, gummies, lollipops, mints, pastilles and hard/chewy candies based in Chicago, Illinois. William Wrigley Jr. started the company in 1891, originally offering the chewing gum as a complimentary product for purchasing his baking powder. The gum become so popular that Mr. Wrigley changed the …show more content…
Wrigley has major distribution channels and long-term relationships in Eastern Europe, particularly in Russia, with small convenience shops and independent retailers. This relationship placed Wrigley ahead of other big confectionery companies in Eastern Europe.
Wrigley is currently a publicly traded company with a family-led management team. Wrigley hired its first non-Wrigley family member, William Perez, as the president and CEO of the company in 2006. The majority of Wrigley executives worked at the company for decades. The company’s board of directors consisted primarily of industry leaders. The company’s highest retention rate in Chicago made Wrigley the area’s top employer.
By 2007, the company had net sales of 20% coming from new products. Revenues increased 15.1% over 2006, to $5.4 billion. Operating profit increased by 17.2% over 2006, to $962.8 million. Stock delivered stable returns of 9% to 10 % per year for the past 20 years. Wrigley’s ROE grew from 23% in 2006 to 24.3% in 2007 (refer to Appendix …show more content…
The market dynamics create fierce competition for old and new market position. Competitors have to develop creative market strategies and diversify businesses across products. Recent reports alluded to the merging of Hershey Company (Hershey) and Cadbury Schweppes (Cadbury). Mars and Wrigley share the same core competitors, Hershey and Cadbury. In the U.S., Wrigley competes against Cadbury in chewing gum and confectionery sales; whereas Mars competes against Hershey in chocolate sales and confectionery sales. In Europe, both Wrigley and Mars compete in their respective confectionery group against Cadbury. The synergies from such a deal would allow two of the strongest competitors to become even more efficient and competitive. It is conceivable that the combined competitors could exploit the growth regions first and ensure that Wrigley’s is kept from being the industry leader for an extended period of
2 BACKGROUND
Wrigley is a confectionery producer of chewing gum, chocolate, gummies, lollipops, mints, pastilles and hard/chewy candies based in Chicago, Illinois. William Wrigley Jr. started the company in 1891, originally offering the chewing gum as a complimentary product for purchasing his baking powder. The gum become so popular that Mr. Wrigley changed the …show more content…
Wrigley has major distribution channels and long-term relationships in Eastern Europe, particularly in Russia, with small convenience shops and independent retailers. This relationship placed Wrigley ahead of other big confectionery companies in Eastern Europe.
Wrigley is currently a publicly traded company with a family-led management team. Wrigley hired its first non-Wrigley family member, William Perez, as the president and CEO of the company in 2006. The majority of Wrigley executives worked at the company for decades. The company’s board of directors consisted primarily of industry leaders. The company’s highest retention rate in Chicago made Wrigley the area’s top employer.
By 2007, the company had net sales of 20% coming from new products. Revenues increased 15.1% over 2006, to $5.4 billion. Operating profit increased by 17.2% over 2006, to $962.8 million. Stock delivered stable returns of 9% to 10 % per year for the past 20 years. Wrigley’s ROE grew from 23% in 2006 to 24.3% in 2007 (refer to Appendix …show more content…
The market dynamics create fierce competition for old and new market position. Competitors have to develop creative market strategies and diversify businesses across products. Recent reports alluded to the merging of Hershey Company (Hershey) and Cadbury Schweppes (Cadbury). Mars and Wrigley share the same core competitors, Hershey and Cadbury. In the U.S., Wrigley competes against Cadbury in chewing gum and confectionery sales; whereas Mars competes against Hershey in chocolate sales and confectionery sales. In Europe, both Wrigley and Mars compete in their respective confectionery group against Cadbury. The synergies from such a deal would allow two of the strongest competitors to become even more efficient and competitive. It is conceivable that the combined competitors could exploit the growth regions first and ensure that Wrigley’s is kept from being the industry leader for an extended period of