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Biotech / Medical : GUMM - Eliminate the Common Cold -- Ignore unavailable to you. Want to Upgrade?

To: Mark Marcellus who wrote (3810)	3/19/2001 11:38:45 AM
From: DanZ	Read Replies (2) \| Respond to of 5582

I doubt that you will see audited income or balance sheets from Gum Tech's joint ventures. However, the results of Gum Tech's joint ventures are consolidated into Gum Tech's financial statements, and those are audited. You have to assume that the auditor will verify the integrity of the numbers on the consolidated financial statements by reviewing data from the joint ventures. Therefore, even though you won't personally be able to read the financial statements for their joint ventures, they have in essence been audited and received adequate scrutiny. The operating agreement between Gum Tech and Swedish Match requires Gary to be paid a consulting fee if he no longer works for Gum Tech. This clause protects the joint venture (read this as both parties) because Gary's expertise is important to the success of the joint venture. The Swedish Match deal is not going to Wrigley. The press release specifically said that Gum Tech retains ownership of their 49% share of that joint venture. It is reasonable to expect Wrigley to manufacture the gum, however. Did you notice that Wrigley paid more for one small part of Gum Tech's business than many of the bashers thought the entire company was worth? If the part that was losing money and was only contract manufacturing fetched about $27 million in cash plus royalty payments on P&G's dental gum and Gum Tech's own brands, how much do you think the joint venture with Swedish Match is worth considering Gum Tech owns part of that joint venture and the nicotine gum market is much larger than the dental gum market? How much is Gel Tech worth? I'd guess a lot more than the current value of Gum Tech's stock. It is currently trading only $5 per share above the value that Wrigley, Gum Tech, and CSFB put on the part of the business that Wrigley bought.

To: Mark Marcellus who wrote (3810)	3/19/2001 11:10:35 PM
From: Mike M	Respond to of 5582

Another possibility is that GumTech wanted more than than $25 million and Wrigley did a hedged stock deal which results in $2 million going to GumTech at virtually no cost to Wrigley. Perhaps the SEC filings will shed some light on this. Another possibility is that Wrigley wanted someone, maybe Gary, on GUMM's Board of Directors and they thought 200K shares would make a great case. Since we are doing some wild speculation: Wrigleys is now delving into functional gum and GUMM has an awful lot of IP in that area. They are also part of a jv which may send one heck of a lot of nicotine gum business Wrigleys way for many years. Perhaps they are not only making an investment but also protecting their investment. I think my guess makes more sense.