Mars and Wrigley Essay Example | Topics and Well Written Essays - 500 words

Mars and Wrigley - Essay Example Barr, A. (n.d.) â€Å"Buffett gets closer to Mars through Wrigley deal† Available at (Accessed: June 9, 2010). 5 Thelwell, E. (April 28, 2008) â€Å"Mars snaps up Wrigley for $23bn with help from Buffett†. Available at (Accessed: June 9, 2010). 5 Mars and Wrigley had individually been playing in the food sector of United States until the former acquired the latter during the second half of 2008 in lieu of US$23 million. Since then, the merged company had been enjoying a significant part in the food market of USA, with an increased support from the investors. This favor has been reflected in the form of an appreciated P/E ratio of 27.8 for the company, compared to that of the market which is floating at 15. The relevance of this statistic is that investors are ready to pay 27.8 times the amount they expect to earn from Mars-Wrigley shares. In contrast, the average market statistic is 15 times the amount that investors are willing to pay for earning 1 unit. Clearly, the shares of the merged company have been selling at a market premium, which could easily be concluded as a consequence of a positive anticipation from the mass. There might be a few reasons behind such an optimistic approach though. Firstly, after acquisition, the position of the merged company rose to those of peers of high-end players like Cadbury and Nestle. In other words, Mars-Wrigley since 2008, started to be known as competitors for the two giants. Secondly, the merged company has expanded its productive capabilities and range of goods which it produces, since 2008. Previously, Cadbury had been the only player in the US food sector which had