Wrigley, the merger, and the comment letters…

April 28, 2008

The big merger news this morning is that Mars plans to buy Wrigley (WWY) in an $23 billion deal that carries a hefty premium for Wrigley’s shareholders, given Friday’s closing price of $62.45.

But what’s really interesting to me is what role a string of increasingly testy comment letters between the company and the SEC had in pushing Wrigley to go private. The most recent one — from Feb. 25, but released only recently by the SEC is one pretty unfriendly paragraph from Carmen Moncada-Terry to Wrigley CEO William D. Perez:

Without more detail, we cannot agree or disagree with your conclusion that you have an appropriate basis to omit the EICP performance targets related to earnings per share, unit volume, and return on invested capital and sales growth. Since you are in possession of all of the facts related to your disclosure, we have decided that we have no basis to disagree with your decision to omit this information from your filing.

The letters, the first of which is a six-page letter with 17 questions dating back to last Aug. 21., questioned a number of the companies compensation disclosures, including its change-in-control payments. Another letter from Jan. 18 starts out by noting the failure to address earlier questions by the SEC. Just a quick note on accessing the letters — the ones from the SEC are pdfs.

While it’s hard to say definitively whether the comment letters pushed Wrigley into a deal that would take them private, the back and forth with the SEC probably made them a lot more receptive to Mars’ deal.

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Michelle is heading off later today on a mystery trip to celebrate a birthday milestone for her mom (she reads the site, so no disclosure). In my absence, my regular substitute, who prefers to remain anonymous, as well as Contributing Editor Wendy Fried, will be posting daily. I’ll be back on Wednesday, May 7.

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