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The William Wrigley Jr. Company had 232.441 million shares outstanding. A repurchase of shares would alter...

The William Wrigley Jr. Company had 232.441 million shares outstanding. A repurchase of shares would alter that amount. The Wrigley family controlled 21% of the common shares outstanding and 58% of Class B common stock, which had superior voting rights to the common stock.1 Assuming the Wrigley family did not sell any shares, how would the share-repurchase alternative affect the family’s voting-control position in the company?

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Expert Solution

The Wrigley family did not sell any shares.

Wrigley holds 21% of common stock. This means other shareholders hold 79%

Wrigley holds 58% of Class B Common stock. This means other shareholders hold 42%

Class B common stock have superior voting rights

Total Shares = 232.441 million

Wrigley holds 24.7 mn shares out of 42.6 Class B Common stock (58%)

Wrigley holds 39.9 mn shares out of 189.9 common stock (21%)

Multiplying 10 votes per share for Class B common stock. (Superior voting)

Wrigley has 247 mn votes out of 426 mn votes in Class B Common stock (58%)

Wrigley has 39.9 mn votes out of 189.9 mn votes in common stock (21%)

After the share repurchase, Wrigley Family's voting control position improves from 46.6% to 48.8%, due to the family's excessive holding of Class B common stock (that gives 10 votes per share compared to 1 vote per share for common stock).

The voting control composition for the family varies to a little extent as controlling levels of ownership remain consist with levels which present prior to the recapitalization. They still hold under 50% of the total stake of the company.

jeff jeffy answered 1 year ago
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