Suggested Questions for Wrigley’s Case

1. In the abstract, what is Blanka Dobrynin hoping to accomplish through her

active-investor strategy?
2. What will be the effects of issuing $3 billion of new debt and using the proceeds
either to pay a dividend or to repurchase shares on:
a. Wrigley’s outstanding shares?
b. Wrigley’s book value of equity?
c. The price per share of Wrigley stock?
d. Earnings per share?
e. Debt interest coverage ratios and financial flexibility?
f. Voting control by the Wrigley family?
3. What is Wrigley’s current (prerecapitalization) weighted-average cost of capital
(WACC)?
4. What would you expect to happen to Wrigley’s WACC if it issued $3 billion in
debt and used the proceeds to pay a dividend or to repurchase shares?
5. Should Blanka Dobrynin try to convince Wrigley’s directors to undertake the
recapitalization?

Suggested Questions for Timken’s Case

1. How does Torrington fit with the Timken Company? What are the expected
synergies?
2. What is your stand-alone valuation of Torrington? Be prepared to explain and
justify all the major assumptions used in your estimate.
3. What is your with-synergies valuation of Torrington? Be prepared to explain
and justify all the major assumptions used in your estimate.
4. Should Timken be concerned about losing its investment-grade rating? How do
Timken’s financial ratios compare with those of other industrial firms in 2002?
How would those ratios change if Timken borrowed $800 million, for example,
to buy Torrington?
5. If Timken decides to go forward with the acquisition, how should Timken offer
to structure the deal? Is Ingersoll-Rand likely to want a cash deal or a stock-for-
stock deal?
6. What are the risks for Ingersoll-Rand of accepting Timken shares for some or
all of the consideration?