The
M & A
Researcher

About Us

Current Reports

Sample Reports

Subscribe

Contacts


"The Most Accurate and Concise Merger Arbitrage Information Source, Since 1998"




For a free trial, email trial@maresearch.com. We will reply with password information as soon as possible.


Today's Sample Report

William Wrigley Jr. Co. (WWY) - Mars, Inc.

April 30, 2008 (10:10a) - Initial Analysis

Although this proposed merger very obviously represents major development in the overall confectionery/candy industry, it appears that combination is essentially vertical in terms of each company's primary strength. Wrigley, of course, is the world's iconic leader in the gum segment of the confectionery market, while Mars remains among the top-tier players (U.S. and internationally) in the chocolate confectionery segment, along with Cadbury, Nestlé, and of course Hershey.

Market share data seems to vary greatly depending on source, geography, and segment. This 2004 Leatherhead Food report teaser offer probably the best encapsulation of the candy market in terms of competition:

"Mars represents the world’s leading supplier in terms of confectionery sales, with revenue exceeding USD8bn in 2002. Other leading companies include Nestlé and Cadbury Schweppes, which has strengthened its position through the acquisition of the former Adams operations."

"The global confectionery market remains fragmented, with the leading 6 manufacturers accounting for less than 45% of value sales between them. The market’s leading suppliers are Mars, Nestlé and Cadbury Schweppes, which together account for almost 30% of value sales."

"In recent years, the global confectionery industry has been characterised by a spate of merger and acquisition activity. Within the last few years, most of the industry leaders – such as Cadbury Schweppes, Nestlé, Wrigley and Kraft – have all made significant acquisitions, while acquisition activity has also occurred amongst some of the industry’s smaller players."

The chart below clearly illustrates the international market's fragmentation in each segment, and particularly the literal absence of significant competition between these two companies in their respective areas of strength (Chocolate vs. Gum):

Market share in the global confectionery market (US$ share)

  Global
confectionery
market
Chocolate Gum Candy
Cadbury Schweppes 9.9% 7.5% 25.7% 7.2%
Mars 9.0% 14.8% 3.0%
Nestlé 7.8% 12.6% 0.1% 3.2%
Wrigley 5.8% 35.9% 2.7%
Hershey 5.5% 8.2% 1.1% 2.7%
Ferrero 4.4% 7.3% 1.5%
Kraft 4.3% 7.7% 0.1% 0.4%

In the U.S., Hershey currently possess roughly 29% of the overall confectionery market, and this will be surpassed in broad market share as a result of this combination. However, it can not be emphasized enough that the companies products are basically complimentary with respect to the confectionery market, and only the broadest possible interpretation of the market could draw any sort of serious antitrust scrutiny. This is extremely unlikely to happen in this particular situation.

The following chart provides recent (2007) market share data for the U.S. candy/confectionary industry. Note that this particular data indicates the combined entity will surpass Hershey by .1% for all domestic candy sales in the United States:

{short description of image}

(Source: 2008 National Confectionery Association resource guide.)

In sum, despite the enormous, long-term magnitude of this deal to the candy industry, there is simply no way it can actually be labeled anti-competitive or problematic from a regulatory perspective. As such, it is very likely the companies will clear the various regulatory hurdles with very little, if any, delays and should be able to complete the transaction in about a four-month time frame.

·



Offer for Non-Subscribers

The M & A Researcher is now offering copies of our vast transaction archive to non-subscribers. This invaluable resource contains more than 600 past merger transactions dating back to May 1998 (Ameritech-SBC Communications), and includes all research, analysis, and historical data compiled by The M & A Researcher. The archive size currently exceeds 50 megabytes of information and will be provided on pre-formatted CD-ROM disks.

Price per disk: U.S. $2,000







Disclaimer: The M & A Researcher IS A SUBSCRIPTION-BASED INFORMATION SERVICE FOR INVESTORS/TRADERS AND IS NOT A RECOMMENDATION TO BUY OR SELL SECURITIES, NOR AN OFFER TO BUY OR SELL SECURITIES. THE INFORMATION AND DATA ON THIS WEBSITE ARE PROVIDED ON AN "AS IS, AS AVAILABLE" BASIS WITHOUT WARRANTY OF ANY KIND. The M & A Researcher OBTAINS AND PRESENTS THE INFORMATION CONTAINED HEREIN FROM SOURCES DEEMED TO BE RELIABLE, BUT MAKES NO GUARANTEE AS TO THE ACCURACY OR COMPLETENES OF THIS INFORMATION. ALL INFORMATION IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY, AND The M & A Researcher SHALL NOT BE LIABLE FOR ANY ERRORS OR OMISSIONS, OR FOR ANY ACTIONS TAKEN IN RELIANCE THEREON.

COPYRIGHT© 1999-2008 MAR, LLC.

SES by applerock.com.