This past week, Wrigley Co. (NYSE: WWY) filed a proxy statement for its $23 billion sale to Mars. And, if you go to page 18, you'll see an account of the transaction -- and how Goldman Sachs Group (NYSE: GS) was a key player.
Actually, it was back in 2006 that Goldman arranged a meeting between Wrigley and Mars. After signing confidentiality agreements, the parties talked about possible business arrangements (although, a buyout was not mentioned -- but, I'm sure, it was something everyone was thinking about, especially Goldman).
However, by August 2007, Mars and Goldman talked about possible strategic options. One suggestion: buy Wrigley. To this end, Goldman arranged a meeting with Berkshire Hathaway (NYSE: BRK.A) to explore financing possibilities.
By April 2008, Mars had made an overture to William Wrigley, Jr., to discuss a possible transaction. The result: Mars offered $75 per share.
Of course, the price was not enough. As a result, there were several more bids -- with the final one at $80 per share.
Goldman would not only provide advisory services on behalf of Mars, but also finance part of the bid. No doubt, this was a potential conflict of interest, but the parties consented to the arrangement. After all, Goldman had longstanding relationships with Wrigley and Berkshire Hathaway. Besides, the parties wanted to maintain confidentiality and make sure the deal would not slow down.
Throughout the deal process, Goldman demonstrated it's new-fangled model of investment banking -- that is, playing the role of adviser and funder. It's tricky but can be helpful in major deals.
Moreover, it was well worth the effort. Goldman snagged an advisory fee of roughly $46 million.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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