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| Mars & Buffet to Buy Wrigley |
Posted by Miller on April, 28. :: 5 Comments
Mars, With Buffett, to Buy Wrigley for $23 Billion (Update4)
By Chris Burritt
More Photos/Details
April 28 (Bloomberg) -- Mars Inc., backed by billionaire Warren Buffett, agreed to buy Wm. Wrigley Jr. Co. for $23 billion to create the world's biggest candy maker.
Wrigley surged 23 percent in New York trading today after the companies said Mars would pay $80 for each of the gum maker's shares, with Buffett's Berkshire Hathaway Inc. providing part of the financing. Mars is offering 28 percent more than Wrigley's closing price on April 25.
The combined company will have $27 billion in annual sales and 14 percent of the world's candy market. Buffett will get more than 10 percent of Mars's Wrigley unit. Mars, the maker of M&Ms and Snickers, will add its Starburst and Skittles candies to Wrigley's Lifesavers and Altoids brands.
``It's a great price,'' said Thomas Burnett, director of research at New York-based Wall Street Access. ``Nobody is going to pay more than that. Who is going to go up against Mars and Buffett?'' He doesn't own shares of Wrigley or Berkshire.
Mars and Chicago-based Wrigley together will control almost 28 percent of the U.S. candy market, eclipsing Hershey Co.'s 24 percent share of consumer purchases, according to Euromonitor International Inc. in Chicago, citing 2006 sales. It will also become the largest candy maker, surpassing to Cadbury Schweppes Plc's 10.1 percent share.
The purchase will be financed with $11 billion from Mars, $4.4 billion from Berkshire and $5.7 billion from Goldman Sachs Group Inc. Berkshire will also buy a $2.1 billion stake in the Wrigley division once the purchase is completed.
Buffett Comments
``There's really nothing that can go wrong with something like the Wrigley and Mars brands,'' Buffett, 77, Berkshire's billionaire chief executive officer, said today in an interview on the CNBC television network. ``People are eating more and more of their products every day.''
Wrigley jumped $14.50 to $76.95 at 12:50 p.m. in New York Stock Exchange composite trading. The shares had gained 6.7 percent this year before today. McLean, Virginia-based Mars is the eighth-largest private company in the U.S., Forbes magazine said in November.
Mars ``is primarily a chocolate company and we are primarily a chewing gum company,'' Bill Wrigley, Wrigley's chairman, said today on a conference call. Combining is ``about being able to invest for the long term and grow our business. We are very pleased with our competitive stance.''
Sales at Wrigley may rise 9 percent this year, the slowest pace since 2000, according to the average estimate of nine analysts surveyed by Bloomberg. Competition from London-based Cadbury's Trident and Dentyne gums in the U.S. has eroded its market share.
Global Competition
Cadbury, the maker of Dairy Milk chocolate, bought Pfizer Inc.'s Adams candy unit for $4.2 billion in 2003 to become the world's second-largest maker of chewing gum.
Since November 2006, Mars has been winning market share in the U.S., while Hershey's has dropped, Alexia Howard, a Sanford C. Bernstein analyst who recommends investors sell Hershey, wrote in an April 11 note to investors.
``The deal appears to make strategic sense for Mars as it would give the global confection leader even greater scale as well as global distribution,'' Eric Katzman, an analyst with Deutsche Bank Securities Inc., wrote in a research note today before the announcement. Other companies may be forced to consider a merger, he said.
Hershey Strategy
The trust that controls Hershey discussed ways to merge the chocolate company with Cadbury in a way that wouldn't decrease the trust's ownership, the Wall Street Journal reported last year. Cadbury will split off its U.S. drinks unit May 7 and begin trading as two separate companies: Cadbury Plc in London and Dr Pepper Snapple Group in the U.S.
Hershey rose as much as 7.3 percent in New York trading, while Cadbury climbed 2.8 percent in London.
In 2006, Wrigley named former Nike Inc. chief William Perez president and CEO, the first person outside the Wrigley family to head the company.
William Wrigley Jr. began selling soap in Chicago in 1891 and eventually turned to chewing gum, an item he was giving away for free with each sale, according to Wrigley's corporate Web site. He introduced Juicy Fruit and Wrigley's Spearmint in 1893, two brands the company still sells today.
Mars History
Mars, founded in 1911 by Frank C. Mars, is still family owned. The company gets about 45 percent of revenue from chocolates and other snacks. Its biggest division is pet food, which sells Whiskas cat food and Pedigree for dogs, and accounts for 46 percent of sales, according to the company's Web site.
Berkshire Hathaway, based in Omaha, Nebraska, has about $40 billion to spend on acquisitions. Buffett has built Berkshire over four decades from a failing textile maker into a $195 billion holding company with businesses ranging from candy making to insurance.
Berkshire has stakes in companies including Coca-Cola Co. and Buffett ranks as the world's richest person, according to Forbes magazine.
Additional financing as well as advice is coming from JPMorgan Chase & Co, Mars said. Simpson Thacher & Bartlett LLP is acting as its legal counsel.
Goldman Sachs and William Blair Inc. provided Wrigley with financial advice. Skadden, Arps, Slate, Meagher & Flom, LLP served as legal adviser.
To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at cburritt@bloomberg.net.
Last Updated: April 28, 2008 12:58 EDT
Bloomberg
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| Hedge Fund Manager: 1 Man, 1 Year: $3.7 Billion Payout |
Posted by BumbleBeeBoogie on April, 18. :: 0 Comments
1 Man, 1 Year: $3.7 Billion Payout
Hedge Fund Manager Won Big by Betting Mortgages Would Fail
By David Cho
Washington Post Staff Writer
Thursday, April 17, 2008; D01
The subprime mortgage mess that caused massive losses for homeowners and banks was a little kinder to hedge fund manager John Paulson. Betting subprime mortgage securities would sour, Paulson personally earned $3.7 billion last year.
Yes, you read that correctly. That's billion with a "b."
He wasn't the only one with Titanic-size profits. Two other fund managers, George Soros and James Simons, who are notoriously secretive about their investments, earned $2.9 billion and $2.8 billion, respectively, according to Alpha Magazine's annual list of top hedge fund earners.
The numbers left jaws agape across Wall Street and Washington. With his windfall from last year alone, Paulson could have bought troubled Wall Street giant Bear Stearns three times over. Or he could have matched the price Delta agreed this week to pay to merge with Northwest Airlines and still have $600 million left over.
A few years ago, individual income reaching into the billions of dollars was unfathomable. In 2002, the first year the magazine tracked hedge fund compensation, the top 25 managers earned $2.8 billion combined.
Paulson's feat was even more astonishing because he started 2007 managing $6 billion, not a massive pool of money by hedge fund standards. Over the course of the year, one of his funds earned a whopping 590 percent return, and another soared 353 percent, according to Alpha. By the end of December, his funds' assets were worth $28 billion.
He amassed his winnings by "shorting" securities linked to subprime mortgages. In a short sale, the investor borrows securities -- in this case, subprime mortgages that were widely held by banks, brokerages and other investors -- and sells them to another buyer. Later, the investor must buy those securities back and return them to the original lender. As the subprime market collapsed, the value of the securities fell, and Paulson was able to pocket the difference. The lenders were stuck with the losses.
Several hedge fund managers, including Philip Falcone, who has been challenging the board of the New York Times Co., also profited from the mortgage crisis by betting that subprime debt securities would plunge in price. Falcone earned $1.7 billion last year. Others made fortunes by betting that the prices of commodities such as oil, sugar and corn would rise.
Hedge funds are pools of private money, largely generated from wealthy individuals, pension funds and endowments, used for a wide range of investments. Usually 80 percent of any gains are given to such investors, while fund managers take 20 percent, plus an annual fee for their services. Alpha's list tracks the income that managers receive after paying their staff members and other expenses.
Some Wall Street analysts who follow the industry said the gigantic compensation figures may prompt Congress to consider raising taxes on the business. Last year, several lawmakers introduced bills aimed at raising the tax rate, usually 15 percent, that fund managers pay on their gains. None of these efforts became law.
"Washington is clearly aware of the numbers and has been following the billions of dollars that are being generated," said Michael Peltz, editor of Alpha.
Daniel Strachman, a former hedge fund consultant and author of several books including "The Fundamentals of Hedge Fund Management," was skeptical of raising taxes on hedge fund managers, saying they should be rewarded for taking huge risks. Most managers have their own money in their funds and suffer massive losses when their investments go bad.
"It's clear somebody has to win and somebody has to lose," he said. "It's not pretty at all because people say, 'Oh my God. Look how much money these guys are making while people are losing their homes and are complaining about the cost of eggs and sugar.' But so what? We don't live in a society that is pretty all the time. That's why it's capitalism."
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| Low-power air conditioners are hot items in Baghdad |
Posted by BumbleBeeBoogie on April, 14. :: 1 Comment
We could use these units in the US and throughout the world. ---BBB
Low-power air conditioners are hot items in Baghdad
By Hannah Allam | McClatchy Newspapers
Posted on Friday, April 11, 2008
Khalida Waleed, 32, opens the new low-power air conditioner she bought this month in Baghdad. The 5-ampere split-unit air conditioner is a hot commodity this season, with Iraqis desperate to stay cool despite just five hours or so of electricity a day. | View larger image
BAGHDAD — Khalida Waleed has no idea who designed the new low-power air-conditioning unit she bought for her family a few weeks ago, but she knows what she would do if she ever met the mystery engineer.
"I'd kiss him!" she said, fluttering her eyelashes in a mock swoon.
Waleed is among thousands of Iraqis who are snapping up Baghdad's hottest summer appliance: a split-unit air conditioner that can cool a room on just five amperes, half the allotted power under the Iraqi government's 10-ampere pilot program, which promises a more equal distribution of the country's scarce electricity.
Traditional A/Cs, both window and split units, have become all but obsolete because they require a whopping 16 amperes, putting them out of reach for Iraqis limping along on about 10 amperes of electricity at any given time.
Other options such as air coolers, the noisy devices sometimes called swamp coolers in the United States, work by simple evaporation and don't stand a chance against Iraq's scorching 120-degree summers. And while ceiling fans stir the air, they can't really chill a room.
That's why the new low-power A/C model is not just a nifty gadget, it's a godsend for Iraqis who dread yet another season of soaking their beds with water or sleeping on the roof to keep cool. Even with price tags of up to $350 apiece, a fortune for many Iraqis, local merchants are scrambling to keep them in stock. Some stores have waiting lists, and owners hire neighborhood boys to keep close watch on the precious cargo piled outside storefronts to entice sweaty passers-by.
"Iraq is thirsty for these things," said Basim Majeed, a Baghdad appliance vendor who sells the 5-amp units to Iraqis as well as to government offices that buy in bulk. "I sleep beside mine!"
The 5-ampere air conditioner first appeared on the local market two years ago and only now is coming into its heyday. Iraqis said they initially were skeptical about parting with so much money, fearing breakdowns or a disappointing output. Others said they clung to the hope that the national power supply would improve enough this year to crank up their idle window units.
Now, with the mild spring weather quickly disappearing and state-supplied electricity hovering at a five hours or fewer each day, Iraqis are more willing to take the plunge.
Vendors said the low-power A/Cs have become wildly popular in recent months because they solve two problems. First, they require only five amperes of electricity, unlike the older versions, so even families on the government's electricity rationing plan or those who can afford only small portable generators can once again have air conditioning. Secondly, they're much quieter than window units because they're split, meaning the radiator fan and other mechanics are outside the home, connected by tubes to the indoor vent that shoots out cold air.
The units available in Iraq bear famous international brand names — LG, Carrier, Kelon — but they were all made in Chinese factories, vendors said. Of several customers interviewed about their 5-ampere split units, the only ones who expressed buyer's remorse were those who said they didn't fully understand the caveats: The unit works best in a small, enclosed room with the door shut. It's not ideal for a busy office, for example, or in a large, open family room.
"It didn't cool the office because we had customers all the time. If you wanted to feel cold, you had to sit directly under it," said Firas al Tamimi, whose company bought and then discarded one of the 5-amp units. "The government should improve the national electricity because all the other substitutes are unsuccessful."
Still, for many Iraqis bracing for a sixth miserable summer since the U.S.-led invasion destroyed the country's power infrastructure, the units are their best hope yet for a little relief.
Waleed, the woman who vowed to kiss the appliance's designer, had planned to sit out the summer in neighboring Syria until a relative told her about the newfangled cooler known here simply as a "split." After hearing rave reviews, Waleed plunked down $340 and surprised her family with the LG unit, which is now installed in the sealed living room, where they will sleep en masse all summer.
"I realized we have to make our own innovations because no one else will help us," she said. "When I brought the split home, everyone was so happy. My sister said, 'This is the summer we're going to beat the heat!' All the neighbors and relatives heard about it, and they went out got them, too."
Waleed, 32, said she's now saving up for her own unit and dreams of lounging in the privacy of her bedroom, reading and chatting on her cell phone as cool air wafts around her.
"I hate the heat more than the terrorism and the bombings," she said. "You feel hot, dirty, you can't eat and you feel thirsty all the time. Husbands and wives can't even bear to touch. You don't like anyone. You don't even like yourself."
(McClatchy special correspondent Jinan Hussein contributed.)
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| Man who founded Ikea and is worth £15bn has checkered past |
Posted by BumbleBeeBoogie on April, 14. :: 6 Comments
He lives in a bungalow, flies easyJet and 'dries out' three times a year. the man who founded Ikea and is worth £15bn
By LUCY BALLINGER - Daily Mail UK
14th April 2008
Self-made man: Ingvar Kamprad with wife Margaretha
In his faded coat, tinted prescription glasses and scuffed shoes, he looks like just another pensioner scraping by on a tight budget. But the man pictured here is Ingvar Kamprad, the reclusive Swedish founder of Ikea. And he is worth £15.7billion. That makes him the world's seventh richest man, but the 81-year-old admits he is still "a bit tight" with money.
He takes easyJet flights, drives himself around in a 15-year-old Volvo, and has furnished his modest house almost entirely with Ikea items - which he assembled himself. He boasted that he fired his barber of many years' standing after finding another who would cut his hair for only £6. And when he arrived at a gala evening recently to collect a businessman of the year award, the security guards refused to let him in because they saw him getting off a bus when he arrived.
A former Nazi sympathiser in the years immediately following the Second World War, he is a self-confessed alcoholic who admits he has an ongoing problem with drink. But he says he has it under control and adds that he "dries out" three times a year.
His eagerness to save money extends to his visits to London, when he shuns taxis and prefers to use the Tube or buses.
A simple life: Mr Kamprad's Swiss home, furnished almost entirely with items from Ikea. He now lives in semi-retirement with his wife Margaretha in a villa in Switzerland. The couple are often seen dining out in cheap restaurants and haggling over prices in the market. He always does his food shopping in the afternoon, when the prices in his local market start to fall.
Recently, a statue of him was erected in his Swedish home town, and he was invited to cut the ribbon. It was reported that instead he untied it, folded it neatly and handed it to the mayor, telling him he could now use it again.
Explaining his frugal nature, he said: "I am a bit tight with money, a sort of Swedish Scotsman. But so what? "If I start to acquire luxurious things then this will only incite others to follow suit. It's important that leaders set an example. "I look at the money I'm about to spend on myself and ask if Ikea's customers could afford it. "From time to time I like to buy a nice shirt and cravat - and eat Swedish fish roe."
Mr Kamprad was 17 when he founded Ikea in 1943.
The name came from his initials, IK, with an E for Elmtaryd, the family farm where he grew up, and an A for Agunnaryd, his home village.
He came up with the idea of flat-packed furniture when he was trying to fit a table into the boot of his car - a friend suggested he should take the legs off, and the rest is history.
He opened his first store in 1965, only to see the wind smash the neon sign and cause a fire which burned the place down.
From that inauspicious beginning-Ikea has grown from a village-based mail order business to a multinational empire with a turnover of nearly £9billion a year.
It is 21 years since Ikea opened its first British store, in Warrington, Cheshire, taking the furniture business by storm and bringing the joys - and frustrations - of the flatpack to countless homes.
Ikea is now Britain's fourth biggest furniture retailer despite having relatively few branches. It has been claimed that more people read the Ikea catalogue than the Bible - and that one in ten Europeans have been conceived on an Ikea bed.
The company is now run jointly by Mr Kamprad's three sons Peter, 44, Jonas, 41, and Matthias, 39, because their father does not want any one person to have total control.
Photos
http://www.dailymail.co.uk/pages/live/articles/news/news.html?in_article_id=559487&in_page_id=1770
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