Mars to buy gum giant Wrigley
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American candy giant Mars is putting 23 billion dollars on the table to buy the worldwide top chewing-gum maker Wrigley. Both companies hope the deal will be done in six months to a year.
US candy giant Mars announced plans with Warren Buffett's Berkshire Hathaway on Monday to buy chewing gum maker Wrigley for some 23 billion dollars in a deal that could shake up the global industry.
The deal calls for Wrigley shareholders to get 80 dollars in cash per share, a premium of 28 percent to its Friday closing price.
Financing for the transaction will be provided by Berkshire Hathaway, and investment banks Goldman Sachs and JPMorgan Chase.
Berkshire Hathaway, the holding company of the world's richest person, Buffett, will make a minority equity investment in the Wrigley subsidiary.
The company combines Mars, a privately held firm based in McLean, Virginia, which makes Snickers, M&M's and Dove candy along with products such as Uncle Ben's rice, with Wrigley, the Chicago-based maker of chewing gums such as Doublemint and other products such as Life Savers candies.
"When this transaction is completed, we will be proud to welcome Wrigley's associates to our company," said Paul Michaels, global president of Mars, Incorporated.
"The strong cultural heritage of two legendary American companies with a shared commitment to innovation, quality and best-in-class global brands provides a great basis for this combination. We are looking forward to continuing on our path of growth by jointly developing those values even further."
In March, Buffett, 77, was named the world's richest man on Forbes annual billionaire's list which put his wealth at 62 billion dollars.
The tie-up brings together two US companies with long traditions in the confectionery business.
The William Wrigley Jr. company was founded in Chicago in 1891. According to the company's history, William Wrigley came to Chicago from Philadelphia with 32 dollars in his pocket "and unlimited enthusiasm and energy."
Mars was founded in 1911 in Tacoma, Washington, and became known for its candy bars including Milky Way and Snickers. It later acquired other brands include pet food products.
The William Wrigley Jr. Company, a Chicago icon with its name on a famous office building and the Chicago Cubs baseball stadium, will become a privately held firm with the deal.
Funding for the deal will include 11 billion dollars from Mars along with a 5.7-billion-dollar debt facility from Goldman Sachs and 4.4 billion in debt from Berkshire Hathaway.
Berkshire also committed to buy a 2.1-billion-dollar stake in Wrigley at a discount to the price being paid to Wrigley stockholders.
Wrigley shares leapt 23 percent to 76.98 dollars on the announcement.
Wrigley separately reported fiscal first-quarter earnings of 168.6 million dollars, or 61 cents a share, on sales of 1.45 billion.
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