The worst of the credit crunch seems to be over in the stockmarkets with the privately-owned Mars company taking over the Wrigley confectionery company for $US23 billion, with some help from Warren Buffett, and reclusive American billionaire, Kirk Kerkorian, back chasing yet another American car giant.
Buffett’s involvement with Mars is fascinating. Mars is one of the largest private companies in the US and rather than give up that privacy by raising capital from more public sources, it has turned to Buffett and his Berkshire Hathaway company to finance much of the Wrigley deal. In fact the takeover has the structure of a private equity buyout, with exception of the listed Berkshire.
The deal will be financed with $US11 billion from Mars, $US4.4 billion from Berkshire and $US5.7 billion from Goldman Sachs. Berkshire will also buy a 10% stake in the Wrigley division for $US2.1 billion when the takeover is completed. The merged group will be the largest candy group in the world with more than 14% of the global market in chewing gum, chocolate bars and other sweets.
In the case of Kerkorian, you could say he’s never met an American car company he didn’t like. He has dabbled in Chrysler, played in General Motors in 2006 before quitting in a fit of pique when the company ignored his entreaties and has now parked himself on the Ford Motor Company share register.
Kerkorian has bought a 4.7% stake in Ford Motor Co. and plans to buy more. He doesn’t want a takeover; he’s looking for someone else to take him out for a fat profit, as sure a sign as any that the market is almost back to normal.
Kerkorian’s Tracinda Corp currently owns 100 million shares in Ford and announced overnight that it intends to make a cash tender offer for up to 20 million more shares of common stock at a price of $US8.50 per share. The offer price represents a 13.3% premium over Ford’s closing stock price of $US7.50 last Friday. Kerkorian’s company bought the initial 100 million shares at an average price of $US6.91 per share.
The Ford family controls around 4% of the ordinary shares but 40% of the voting rights and the automaker reported a $100 million first-quarter profit last week. US brokers reckon Kerkorian is just playing in the shares to remind the market he’s still a force and will stir the pot, get a capital gain and sell out.
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.