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Apr-29-2008

Sweet deal: Mars and Wrigley to merge

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WASHINGTON (AFP) — U.S. 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. (More...)
The Wrigley family stands to receive more than $4.33 billion for its stake in the company. (More...)
Buffett said, "Bringing together these iconic, world-class companies combines Wrigley's strengths with the deep resources and proven brand-building savvy of Mars and will result in a powerful force for innovation and growth in the global confectionary marketplace." (More...)
WASHINGTON ( Map, News ) - With its proposed $23 billion acquisition of Wrigley, McLean-based Mars Inc. is poised to double not just its refreshment, but its holdings in the confection arena. (More...)
WSJ's Matthew Karnitschnig and Dennis Berman discuss plans by Mars to acquire Wrigley for about $23 billion. (More...)
Earlier, shares reached a 52-week high of $77.75. (More...)
Revenue climbed 16 percent to $1.45 billion from $1.25 billion last year. (More...)
Mars, based in McLean, Va., was founded by the Mars family in 1911 and is still familyowned. (More...)
The transaction will see Mars transfer its global non-chocolate confectionary sugar brands, such as Skittles and Starburst candies, to Wrigley. (More...)
"Wrigley has been feeling the heat" from Cadbury, says David Morris, research director for food and beverage at research firm Mintel in Chicago. (More...)
Gross profit margin rose to 53.1% from 47.3%. (More...)
While sweets and chocolates have struggled, the £10 billion global gum market has been growing at a brisk 8 per cent per year, driven by gum's appeal as an alternative to high-calorie snacks and cigarettes. (More...)
Cadbury and Hershey discussed a deal last year, The Wall Street Journal reported, but talks fell apart. (More...)
Mars "intends for us to run as a separate, stand-alone entity with a high degree of autonomy,'' said Wrigley, who plans to remain executive chairman and said other executives including CEO William Perez will stay in place. (More...)
The company gets about 45 percent of revenue from chocolates and other snacks. (More...)
We have mentioned a few times that buying the oil majors when oil was over $100 a barrel was probably a good idea. (More...)
A combined Mars-Wrigley entity would overtake Cadbury Schweppes as the world's biggest confectionery company. (More...)

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WASHINGTON (AFP) — U.S. 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. [1] Candy maker Mars on Monday said it was acquiring gum maker William Wrigley Jr. Co. WWY for $23 billion in cash, aided by financing and an investment from Warren Buffett's Berkshire Hathaway BRK.A Mars will pay $80 for each share of Wrigley stock, a more than 28% premium to Wrigley's closing price of $62.45 Friday.[2] As if to echo that bullish sentiment, shares of Wrigley popped yesterday after fellow candy maker Mars, with financing from none other than Warren Buffett's Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ), offered to buy the company for roughly $23 billion in cash.[3]

CHOCOLATE giant Cadbury Schweppes and U.S. rival Hershey are likely to come under fresh pressure to join forces after Mars yesterday swallowed chewing-gum maker Wrigley for $23 billion (''11.6bn). The deal, which created the world's largest confectionery company, is being part financed by billionaire U.S. investor Warren Buffett through his Berkshire Hathaway investment vehicle.[4] NEW YORK (AP) — Mars Inc. and Warren Buffett's Berkshire Hathaway Inc., were close to a deal to acquire the Wm. Wrigley Jr. Company for more than $22 billion, a deal that could transform the confectionary industry, people familiar with the agreement told newspapers. The deal could be announced as early as Monday, these people told The New York Times and The Wall Street Journal.[5] Mars Inc. and Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB) agreed to acquire Wm. Wrigley Jr. Co. (WWY) for about $23 billion in a deal that will remake the global confectionary landscape.[6] Warren Buffett's Berkshire Hathaway ( BRK.A ) is helping to finance the deal with a $4.4 billion subordinated loan and will make a minority equity investment of $2.1 billion in the newly created Wrigley subsidiary. "Those of you who know me know that I have been a big fan of Wrigley's business model for many years, and I love their products," said Buffett. "Bringing together these iconic, world-class companies will result in a powerful force for innovation and growth in the global confectionary marketplace." It is Wrigley's intent to see the transaction competed within six to 12 months, according to an e-mail Bill Wrigley Jr. sent to all Wrigley employees.[7]

Combined, the two would pass Hershey with more than 27 percent of the U.S. market. Mars and Wrigley are both family-controlled companies and have been familiar with each other for years. "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," Mars Global President Paul S. Michaels said in a statement yesterday. "The true value of this transaction arises primarily from enhanced growth opportunities, including the potential for cross-pollination of people, ideas and brands, and significant enhancements of sales, marketing and distribution infrastructures," Chairman Bill Wrigley Jr. said in a statement yesterday. He would become executive chairman of his company, reporting to Michaels. In a memo to his company, Wrigley said the combined company will have $27 billion in sales and 64,000 employees.[8] Wrigley chairman Bill Wrigley said the $80-a-share deal represented "tremendous value" for the company's shareholders. He added that a combination with Mars gave the 117-year-old company an "historic opportunity" to grow the business. "In terms of Wrigley's ongoing business, the true value of this transaction arises primarily from enhanced growth opportunities, including the potential for cross-pollination of people, ideas and brands, and significant enhancements of sales, marketing and distribution infrastructures," Wrigley said. Mars Global president Paul Michaels added: "This is not about being bigger - it's about being the best, and providing leadership and innovation across the full range of confectionery categories." Buffet said he had been "a big fan" of Wrigley and said the enlarged business would be "a powerful force for innovation and growth in the global confectionery marketplace".[9]

After the transaction would be completed, the chewing gum concern would become a separate, independent subsidiary of Mars, while Wrigley's shareholders will receive 80 dollars per share in cash, which represents a 28.1 percent premium over the company's shares closing price on Friday, 62.45 dollars. The transaction will help both companies, as Wrigley is a world leader in chewing gum and confections, generating around 5.4 billion dollars in sales. They are two iconic American companies, which, brought together will add value one to another. According to a statement on Monday, Wrigley said that Berkshire Hathaway is set to buy around 10 percent of its shares for 2.1 billion dollars.[10] 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.[1] Wrigley shares soared more than 23% after the opening bell to $77. Mars, which makes candy brands such as Snickers, M&M;'s and Dove, will add Wrigley's Doublemint, Spearmint and Juicy Fruit gums and Lifesavers to its product mix. "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," Mars Global President Paul Michaels said in a company statement. "We are looking forward to continuing on our path of growth by jointly developing those values even further." Other candy makers Hershey HSY, Tootsie Roll TR and Cadbury Schweppes CSG also were rising Monday morning.[2]

Mars, which is still family owned, will take Wrigley private but hold it in a separate stand-alone company. The all American combination, which will throw together Juicy Fruit, Extra and Hubba Bubba with Twix and M&M;'s, is a threat to Cadbury which has been pinching market share from Wrigley through its Trident gum brand. It doesn't need an astrologer to work out that merging Mars with Orbit has the potential to teleport value. The companies said in a statement that shareholders of Wrigley will receive $80 a share, a 28% premium to the $62.45 they were trading at before the deal was announced.[11] The deal was a big surprise across Wall Street late Sunday, but the effects are clear: a colossal candy-and-gum company investing in new markets around the globe, without having to answer to public shareholders. That freedom and market power pose a threat to the other major food companies -- particularly Hershey Co. and Cadbury Schweppes PLC -- that have been weighing merger plans for years. Both Hershey's and Cadbury's shares rose Monday. While both Mars and Wrigley tout the comfortable fit of products and cultures, Mars has no experience with a deal of this scale. It's moving into Wrigley at a very high price, paying 32 times Wrigley's expected earnings for 2008.[12]

The purchase will be financed with $11 billion from Mars, $4.4 billion from Berkshire and $5.7 billion from the Goldman Sachs Group Inc. Berkshire also will buy a $2.1 billion stake in the Wrigley division once the purchase is completed. Shares of Hershey, a rival to the privately held Mars, rose 4.63 percent, or $1.61, to close at $36.35 on the New York exchange in anticipation that the Mars-Wrigley combination would force the Pennsylvania firm to seek its own deal. In recent months, officials of the nonprofit trust that controls Hershey said they would not sell the Pennsylvania icon and instead were seeking a transaction that would give Hershey candies and chocolates greater access to international markets. Hershey has undergone executive upheavals in the last year and is relocating some of its candy production to Mexico.[13] Wrigley Chairman William Wrigley sounded the same theme in a Monday conference call, telling analysts that, "There's no question the financial markets are very challenging right now. Coming up with the capital to make this deal work was a challenge." Through decades of patient, fundamentals-based investing, the 77-year-old Buffett has become one of the richest people on the planet, and his preference for down-to-earth companies that make staples like bricks and boots has brought him to Chicago more than once. A number of years ago, Buffett paid more than $500 million for a 17 percent stake in building-products manufacturer USG Corp., and he has held his position through USG's bankruptcy, its emergence from Chapter 11, the stock's rocketlike surge during the housing boom and its subsequent return to earth. Late last year, he agreed to pay $4.5 billion to acquire a 60 percent stake in the Chicago-based Pritzker family's privately owned industrial conglomerate Marmon Holdings and agreed to acquire the remaining 40 percent in coming years. As for the Wrigley deal, Buffett said in a statement that he has "been a big fan of Wrigley's business model for many years, and I love their products."[14] Sometimes it all comes together: When Berkshire acquired Dairy Queen Inc. a decade ago, Buffett said he and longtime investing partner Charlie Munger were frequent DQ patrons, and he declared that by buying the company, "We have put our money where our mouth is." Sometimes it doesn't: In the mid-1990s, Buffett compiled a 4.3 percent stake in Oak Brook-based McDonald's Inc. valued at $1.37 billion, but he later lost his appetite for the then-sluggish stock and quietly shed the holding. While Buffett's often-stated interest in "companies that I can understand" helps explain his interest in Wrigley, his role as a lender in the deal is out of character. It suggests that, with cash hard to raise because of the turmoil in the credit markets, dealmakers may be seeking out Buffett.[14]

Mars Inc., the maker of the popular M&Ms;, announced on Monday that it has reached a deal to acquire the Wm. Wrigley Jr. Company for the amount of 23 billion dollars, in a transaction that could possibly be the first in a row of other rival companies to merge in order to create bigger and more powerful collaborations. Warren E. Buffett is financially helping the deal, through his Berkshire Hathaway, as he is known for his history with iconic food and beverage businesses.[10] M&M;'s candy maker Mars Inc. has teamed up with billionaire Warren Buffett to buy No. 1 chewing gum manufacturer Wm Wrigley Jr. Co. for $23 billion U.S., creating the world's largest confectionery company.[15] Candy king Mars Inc., with financial support from Warren Buffett's Berkshire Hathaway Inc., plans to buy gum giant The Wm. Wrigley Jr. Co. for $23 billion.[16] April 28 (Bloomberg) -- Mars Inc. and Warren Buffett's Berkshire Hathaway Inc. are close to an agreement to buy Wm. Wrigley Jr. Co. for more than $22 billion, the Wall Street Journal reported, citing unidentified people familiar with the matter. The acquisition will probably be announced as early as today, the newspaper said, adding that both Mars and Wrigley declined to comment. The terms of the purchase aren't immediately clear; it's possible that Berkshire Hathaway will provide financing and become a stakeholder in Wrigley, the Journal added.[17]

Buffett will help finance Mars Inc.' s $23 billion purchase of Wm. Wrigley Jr. Co., adding a stake in the world's largest chewing gum maker to Berkshire Hathaway Inc.' s holdings in Coca- Cola Co. and the makers of Band-Aids and Nabisco crackers. He's betting that customer loyalty for industry-leading products will last through economic downturns.[18] With financing from Warren Buffett, candy maker Mars Inc. on Monday said it is buying confectioner Wm. Wrigley Jr. Co. for an estimated $23 billion in cash. Mars Inc. first approached Wm. Wrigley Jr. Co. with its unsolicited bid on April 11.[19] April 28 (Bloomberg) -- Mars Inc., backed by billionaire Warren Buffett, agreed to buy Wm. Wrigley Jr. Co. for $23 billion to create the world's biggest candy maker.[20]

OMAHA - Warren Buffett, known for his bargain-hunting and love of brand names, would get both by being part of Mars Inc.' s planned $23 billion purchase of the Wm. Wrigley Jr. Co.[21]

Monday, the Wrigley clan announced its finally cashing out after four generations as the iconic confectioner becomes of a subsidiary of privately held Mars Inc. in a $23 billion deal. "Its the end of. equity ownership, but I think the legacy of the Wrigley family will survive and endure for some time to come," said Bill Wrigley Jr., the companys executive chairman and the great-great-grandson of William Wrigley Jr.[22] The deal is valued at more than $24 billion, and together the sweet-makers will become the world's second largest confectionary company. The chairman of the gum-maker, Bill Wrigley Junior, says it was an emotional decision to sell a company that has been in his family for four generations. A decision made easier perhaps by the $85 per share he was offered, nearly a 30 per cent premium over Wrigley's closing share price on Friday (US time). "Certainly, this is an historic and groundbreaking move and we are confident that the agreement represents a win-win-win for our stockholders, the company and our associates," Mr Wrigley Junior said.[23]

In return, Mr Buffett, who is already profiting from bond insurers' woes after setting up a rival securities underwriter to take new business away from the cash-strapped traditional players, will acquire a 19 per cent stake in Wrigley for a discounted $2.1 billion. Bill Wrigley Jr, the chairman and chief executive of Wrigley and the founder's great-grandson, said that he had invited Mr Buffett into the deal for his "wisdom, experience and endorsement", but conceded that the billionaire was also there because of his deep pockets.[24] Combining closely held Mars, maker of Snickers chocolate and M&M;'s, and the 117-year-old Wrigley, whose brands include Juicy Fruit, Doublemint and Extra, will create the world's largest candy maker. "There's really nothing that can go wrong with something like the Wrigley and Mars brands," Mr. Buffett, 77, said yesterday morning in an interview on business TV-channel CNBC. "People are eating more and more of their products every day." In a letter to employees, Wrigley chairman Bill Wrigley, Jr., said part of the reason for doing the deal is because he saw more opportunities to grow the business in a private environment rather than as a public company. Wrigley, which started trading on the New York Stock Exchange in the early 1920s, saw its stock price jump more than 23% yesterday to US$76.91 on news of the takeover offer, which was 28% sweeter than the company's closing stock price on Friday.[25] The deal includes financial backing from Warren Buffett's Berkshire Hathaway. It will combine an assortment of the world's most recognizable candy brands - Mars' Snickers, M&Ms; and Milky Way with Wrigley's Juicy Fruit, Lifesavers and Altoids - all under one corporate portfolio. "The transaction builds the Mars business by strengthening and diversifying its confectionary business, and enhancing its potential for growth in the chocolate, non-chocolate confectionary and gum categories," Mars said in a written statement.[7] The coming together of Wrigley and Mars, maker of the eponymous chocolate bar, could force rival Cadbury to restart its aborted merger talks with America's Hershey. The Mars deal is being part financed by billionaire investor Warren Buffett through his Berkshire Hathaway investment firm. Cadbury, which will become a pure play confectionery business when it sheds its 7-Up to Dr Pepper beverage business this weekend, is set to become an acquisition target unless it takes the lead as the market consolidates.[11] Buffet's Berkshire Hathaway investment vehicle would provide financing to Mars, maker of the chocolate bar of the same name, and end up with a stake in Wrigley, whose gum products have a global presence. The WSJ said the deal could shake up the confectionary industry worldwide and likely prompt other mergers such as between Hershey of the United States and Britain's Cadbury Schweppes. 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.[26]

Assuming the deal receives approval from shareholders and regulators, Berkshire Hathaway will issue about $4.4 billion of debt to help finance the deal. It will also pay $2.1 billion to acquire a minority stake in the Mars subsidiary that will house Wrigley. "Those of you who know me know that I have been a big fan of Wrigley's business model for many years, and I love their products," Buffett said Monday.[27] Funding includes some $11 billion from Mars, a $5.7 billion committed senior debt facility from Goldman, Sachs, and $4.4 billion of subordinated debt from Berkshire Hathaway Inc. At closing, Berkshire Hathaway would buy a minority equity interest for $2.1 billion in the Wrigley subsidiary at a discount to the share price being paid to the stockholders of Wrigley. "Those of you who know me, know that I have been a big fan of Wrigley's business model for many years, and I love their products," said Warren E. Buffett, chairman and CEO of Berkshire Hathaway.[16]

As part of the deal, Warren Buffett's Berkshire Hathaway will purchase a minority stake in Wrigley's worth $2.1bn. "I have been a big fan of Wrigley's business model for many years and I love their products," said Mr Buffett, known as the Sage of Omaha for his shrewd investment record.[28] The deal includes debt financing from Warren Buffetts Berkshire Hathaway Inc., which will also purchase a $2.1 billion minority equity interest in the Wrigley subsidiary once the deal is done.[22] The other person hoping to benefit is the billionaire Warren Buffett. He will provide debt financing to the deal and his investment company Berkshire Hathaway will end up with more than 10 per cent of Wrigley.[23]

Financier invited to join candy deal by Goldman Sachs. Tue Apr 29 06:24:35 GMT+02:00 2008 Mars Inc.' s planned acquisition of Wm. Wrigley Jr. & Co. carries a familiar script for Warren Buffett, who during a previous market rout said he felt like a kid in a candy store. This time, Mr. Buffett's Berkshire Hathaway Inc. has seized on opportunities in insurance, manufacturing and now is loading up on sweets. J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Berkshire emerged largely unscathed from the credit crunch that laid low their Wall Street brethren, so their willingness to step up and fund a big deal is a good sign for the financial markets and the economy.[29]

Shares of archrivals Hershey (NYSE: HSY ) and Cadbury Schweppes (NYSE: CSG ) traded up somewhat today on the announcement and could continue to drift upward. There should be plenty of further developments, and the acquisition price may not be as rich as it seems, given the strong growth Wrigley is seeing abroad these days. Having a seal of approval from Warren Buffett isn't bad either, and should make for an even more interesting Berkshire Hathaway annual shareholders meeting this Saturday.[30]

Wrigley surged 23 percent in New York trading today after the companies said Mars would pay $80 for each of the gum maker's shares, with Buffett's Berkshire Hathaway Inc. providing part of the financing.[20] The total value of the offer, including the assumption of long-term debt, is $22.9 billion. In addition to the Mars family, billionaire Warren Buffett will take a stake in Wrigley through his Berkshire Hathaway (nyse: BRKA - news - people ).[27] Mars, together with Warren Buffett's Berkshire Hathaway Inc., agreed to acquire Wrigley for about $23 billion.[12]

Warren Buffett took advantage of the credit crunch yesterday as Mars announced an agreed $23 billion (£11.5 billion) takeover of Wrigley in a deal that the world's richest man helped to finance in return for a cut-price stake in the chewing gum group.[24] Mars, the world's largest chocolate maker, and the investor Warren Buffett confirmed today that they would pay $23 billion (£11.5 billion) cash for Wrigley in an agreed deal with America's largest chewing-gum maker.[31]

The Omaha, Neb. -based company also offered $4.4 billion of subordinated debt to fund the deal. "A good time to buy a really great business is when you can do it," Warren Buffett said on CNBC Monday, adding that he understands Mars and Wrigley better than the balance sheets of most major banks.[32] The Omaha, Neb. -based company also offered $4.4 billion of subordinated debt to fund the deal. "In terms of Warren Buffett's sweet spot, these are exactly the kind of brands that he wants," said Jet Hollander, a former candy industry executive who is president of the snack food consulting firm Pre-Eminence Strategy Group.[33]

The gum maker's ornate towering headquarters along the Chicago River is a favorite among tourists for snapping pictures. The Chicago Cubs historic ballpark — Wrigley Field — got its name while the team was owned by the Wrigley family, which sold the franchise decades ago. "When this transaction is completed, we will be proud to welcome Wrigley's associates to our company," Mars President Paul S. Michaels said in a statement. "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." Executives said Wrigley would gain little benefit in weathering a run-up in commodities costs, but said the deal would allow the company to enhance its sales, marketing and distribution systems.[33] Mr Michaels said the transaction with Wrigley would create a shared commitment "to innovation, quality and best-in-class global brands." He also stressed that Wrigley's business will remain in Chicago its home for over a century highlighting its importance to the Mid-West city. The deal, which both companies believe will take 12 months to complete, is likely to face severe regulatory scrutiny in both the U.S. and beyond, even though the combined company will still only control 14.1pc of confectionery sales worldwide. In the U.S., it will face staunch tests by federal regulators, as well as scrutiny from the Congress and the Senate, while in Europe, the European Union is almost certainly set to weigh in with its views.[34]

After the buyout is completed in six to 12 months, Wrigley would become a subsidiary of McLean, Va. -based Mars. Its headquarters will stay in Chicago, where the business has operated since it was founded by the Wrigley family in 1891. "When this transaction is completed, we will be proud to welcome Wrigley's associates to our company," Mars President Paul S. Michaels said in a statement. "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."[32]

The $80 gives Wrigley shareholders a 28% premium based on Wrigley's closing share price of $62.45 on Friday. After the buyout is complete, Chicago-based Wrigley will operate as a subsidiary of McLean, Va. -based Mars and take over Mars' non-chocolate brands such as Skittles and Starburst, according to the press release. Wrigley also will maintain its own headquarters and continue its civic and charitable endeavors. "First and foremost, this is a great transaction at a great price that provides tremendous value to Wrigley stockholders," Bill Wrigley Jr., chairman of Wrigley's board, said in a written statement. Paul S. Michaels, Mars Global president, said, "This is not about being bigger - it's about being the best, and providing leadership and innovation across the full range of confectionary categories."[7] In a global confectionary business there is little room for medium-size players, and publicly traded Wrigley is hooking up with a company that analysts say is a great fit. Operating as a subsidiary of privately owned Mars, the world's largest gummaker should be able to increase its sales, and analysts say Wrigley got a fantastic price: $80 per share, 28 percent above the $64.25 price Wrigley closed at on Friday.[35] Wrigley is a strong company. It reported that its first-quarter profit rose 18 percent to $168.6 million, or 61 cents per share, thanks to strong sales in Eastern Europe and Asia.[36]

Under the agreement, Mars will acquire 100 percent of Wrigley's common stock for $80 per share in a transaction valued at about $23 billion. It is not known how Mars, which is privately held, will fund its $11 billion cash portion of the transaction.[37] Shareholders of Wrigley would receive $80 in cash for each share of stock, a premium of 28.1 percent over Friday's closing price of $62.45. The deal has been approved by the boards of both companies.[38] At $80 a share, the deal represents a 28 per cent premium over Wrigley's closing stock price of $62.45 on Friday.[15]

The $80 per share offer for Wrigley is a 28 per cent premium to Friday's closing price of $62.45. It is understood that Mars's non-chocolate confectionery brands such as Starburst and Skittles will be added to the Wrigley sweets portfolio.[4] McLean-based Mars -- which had $25 billion in revenue in 2007, up from $18 billion in 2006 -- is paying Chicago-based Wrigley $80 per share in cash, a significant premium over Friday's closing price, $62.45.[8] Mars - which had $US25 billion in revenue last year, up from $US18 billion in 2006 - is paying Chicago-based Wrigley $US80 per share in cash, a significant premium over Friday's closing price of $US62.45.[39]

Mars has annual revenue of $22 billion while Wrigley's sales were $5.39 billion last year. Wrigley, which started trading on the New York Stock Exchange in 1923, jumped $14.46 to $76.91 at 4 p.m. The shares had gained 6.7 percent this year before today.[20] David Morris, senior analyst with market research firm Mintel, said the deal made sense, especially for Wrigley. Gum sales increased only about 3 percent last year -- "it's a mature industry," Morris said -- and England's Cadbury Schweppes has been making inroads into Wrigley's U.S. gum share. Morris sees considerable growth for a combined Mars-Wrigley, especially in "harnessing gum as a delivery system for other things, from vitamins to energy," he said.[8] In 2006, Wrigley named former Nike Inc. chief Perez president and CEO, the first person outside the Wrigley family to head the company. Sales at Wrigley may rise 9 percent this year, the slowest pace since 2000, according to the average estimate of nine analysts surveyed by Bloomberg. Competition from London-based Cadbury's Trident and Dentyne gums in the U.S. has eroded its market share.[20]

Wall Street analysts now say Wrigley overpaid for Altoids. The onetime powerhouse mints line saw its sales drop by 7% last year, following a 17% decline the year before. In 2006, Wrigley gave up his CEO job to former Nike ( NKE ) chief William Perez. He remained chairman and continued to run annual shareholders' meetings. Last year, British rival Cadbury Schweppes ( CSG ) grabbed market share from Wrigley with its Trident and Dentyne gum brands, and Wall Street was expecting Wrigley's sales to slow in 2008.[40]

Together, Mars and Wrigley will gain a nearly 28% share of the U.S. candy market, passing current number one Hershey's 24% share, data from Euromonitor International Inc. show. Globally, the new company will be larger than current leader Cadbury Schweppes, which controls a little over 10% of the worldwide candy market with products such as Trident gum and its eponymous candy bar. Mr. Buffett, known as the Oracle of Omaha for his investment savvy, built up his huge fortune by betting on U.S. consumer companies, including Coca-Cola Co. and American Express.[25] The company named Mr. Perez the first non-Wrigley family CEO in the company's then 115-year history. Mr. Wrigley has been much more of a risk-taker than his father, who died suddenly in 1999. He has pushed to diversify the company beyond just a gum maker and transform Wrigley into a broader confectionery company. He dabbled in medicinal gum and bought the Altoids and LifeSavers brands from Kraft Foods Inc. while also holding to traditions, like hiring a new pair of Doublemint twins. His boldest move never saw fruition. In 2002, Wrigley beat out Nestl'' SA and Cadbury with its $12.5 billion bid to buy Hershey.[12] In 1999, when William Wrigley Jr. took over the reins of the century-old company that bears his name, he aspired to take Wrigley ( WWY ) beyond chewing gum to greater heights. He made a bold bid in 2002 to acquire Hershey Foods ( HSY ) for $12 billion, and hired scores of food scientists, chemists, and engineers for an innovation center he opened in 2005 on a 7.6-acre Chicago site that he hoped would yield the next greatest thing since chewing gum. The same year, he bought Life Savers and Altoids, the "curiously strong" mints, from Kraft Foods ( KFT ) for $1.5 billion.[40] The sale of the Wm. Wrigley Jr. Co. to Mars has an obvious winner. William Wrigley Jr., the great-grandson of the chewing gum company's founder, saw the value of his shares swell by about half a billion dollars Monday.[27] No employee cuts are planned, Wrigley said. It had about 16,400 employees at the end of 2007. William Wrigley Jr. began selling soap in Chicago in 1891 and eventually turned to chewing gum, an item he was giving away for free with each sale, according to Wrigley's corporate Web site. He introduced Juicy Fruit and Wrigley's Spearmint in 1893, two brands the company still sells today.[20]

"If that number gets big enough now, there's risk in any company of something happening that won't enable you to get to a bigger number in the future." Mr. Wrigley said he plans to stay involved in the business and will remain its executive chairman. While Wrigley started in the late 19th century on the strength of chewing gum that Mr. Wrigley's great-grandfather originally gave away to sell baking powder, Mars has its roots in the home-made butter-cream candies Frank C. Mars and his wife, Ethel Healy, made out of their kitchen in Tacoma, Wash. Mars is now a diversified, global food company that sells everything from pet-food brands such as Whiskas and Pedigree to food and beverage brands such as Uncle Ben's rice and Flavia coffee.[12] Discussions between Wm. Wrigley Jr. Co. and Mars Inc. to blend two of the best-known names in sweets into the world's largest candy maker began, like any important family gathering, around the kitchen table. On April 11, Bill Wrigley Jr., executive chairman of the chewing-gum empire that bears his name and the fourth consecutive Wrigley to lead the company, went to McLean, Va., to meet with Mars Global President Paul Michaels and Chief Financial Officer Olivier Goudet. They had called Mr. Wrigley to request the meeting, and before long the three men were sharing sandwiches over Mr. Michaels's kitchen table.[41] CHICAGO (AP) — Snickers and M&Ms; candy maker Mars Inc. is buying Wm. Wrigley Jr. Co., which makes Juicy Fruit and Doublemint gum and Life Savers, for about $23 billion in cash.[32] CHICAGO (AP) — Candy maker Mars Inc. says it's buying confectioner Wm. Wrigley Jr. Co. in an all-cash deal valued at almost $23 billion.[42] NEW YORK (CNN) -- Popular candy maker Mars Inc. announced Monday it will purchase confectionary giant Wm. Wrigley Jr. Co. in an all-cash deal valued at approximately $23 billion.[7]

Mars, the makers of M&M;'s, announced a deal yesterday to acquire Wm. Wrigley Jr. Co., a worldwide leader in gums and confections, for about $23 billion.[38]

Chocolate colossus Mars is buying gum goliath Wm. Wrigley Jr. in a $23 billion, sugar-fueled deal that would create the world's largest candymaker and may reshape the landscape of the global confection industry.[8] CHOCOLATE colossus Mars is buying gum goliath Wrigley in a $US23 billion ($A24.5 billion), sugar-fuelled deal that will create the world's largest confectioner and may reshape the landscape of the global confection industry. The merger has been approved by both boards.[39]

There will still be candymakers occupying the fabled Wrigley Building on Michigan Avenue, and the name on the chewing gum will remain Wrigley, but one of America's most famous business families is selling control of its empire in a stunning $23 billion deal that reshapes the world's confectionary industry.[35] Mr Buffett's Berkshire Hathaway investment vehicle, which has $40 billion of cash to spend at a time when deal financing has largely dried up, has contributed $4.4 billion of the funds Mars needed to purchase the world's biggest chewing gum company.[24] Buffett's Berkshire Hathaway company put up $4.4 billion in subordinated debt to help finance the deal, along with $11 billion in cash from Mars and $5.7 billion in senior debt from Goldman Sachs.[35]

Buffett's Berkshire Hathaway Inc. will purchase a $2.1 billion minority equity interest in the Wrigley subsidiary once the deal is completed.[33] Berkshire Hathaway Inc., the Omaha investment company that Buffett heads, would buy a $2.1 billion minority interest in Wrigley at an undisclosed "discount'' from the $80-per-share overall purchase price.[21]

While Berkshire will receive interest on the loan, Buffett's company is separately buying a $2.1 billion stake in Wrigley once it becomes part of Mars. It's unusual for an outsider, or a strictly minority buyer, to participate in the funding of a major deal.[14] Shares of Wrigley, which would become a stand-alone subsidiary of privately held Mars and remain in Chicago, soared 23 percent yesterday, closing up $14.46 at $76.91. It is the third-biggest proposed deal of 2008, trailing Microsoft's $42 billion bid for Yahoo and Swiss pharma-giant Novartis's $28 million try for eye-care company Alcon.[8] '''The deal makes good commercial sense,''' said analyst Julian Lakin of Mirabaud Securities of London. '''Wrigley has been diversifying its product range, getting into candy with Lifesavers and trying to merge with Hershey to get into chocolate.''' The deal could put pressure on competing Cadbury, he said, as the merger would give the combined company about a 15 percent market share, ahead of Cadbury'''s 10 percent hold, Lakin said. Under the deal, Mars''' non-chocolate candy brands, such as Starburst and Skittles, would go to Wrigley.[43] The deal will increase Mars' reach yet further, providing real access to the lucrative chewing gum market, in which Wrigley's sell its products in more than 150 countries worldwide. "Cadbury will have to look at its options and the most obvious is to re-open talks with Hershey over a merger," said Investec Securities analyst Martin Deboo. The pair have held talks in the past but have failed to reach agreement as the Hershey Trust, a charitable concern which controls 78pc of Hershey's voting shares, has always said it does not want to dilute its control over the business.[34]

The two sides were still exchanging documents to finalize the agreement at 2 a.m. Monday. Mr. Michaels said that speculation of deals involving candy players Hershey and Cadbury did not prompt his company to buy Wrigley. "What came into play more was, when you look at an offer as a director of a company. you say, 'OK, I could get this amount per share now versus some number, kind of guessing in the future,'" Mr. Wrigley said.[12]

On Apr. 28, after two weeks of intense negotiations, Wrigley agreed to be bought for $23 billion in cash. The deal gives Mars--maker of such iconic candy brands as M&M;'s and Snickers bars--combined annual sales of $27.4 billion. It should enable Wrigley to fend off hard-charging Cadbury, which earlier in April spun off its U.S. drinks division (BusinessWeek.com, 4/11/08).[40] A deal between the pair would make sense, because Cadbury lacks any form of strong presence in the U.S., while Hershey does not have the global reach which Cadbury is known for. The combination of Mars and Wrigley will create a business with more than $27bn of annual sales, dwarfing both Cadbury with annual sales of £5.2bn ($10.4bn) and Hershey, a relative minnow with just $4.9bn.[34]

Officials said Wrigley's board, which unanimously approved the $80-per-share offer over the weekend, would examine any other offers submitted to the company. Citigroup analyst David Driscoll said he thought a competing offer would be unlikely. "The only other likely buyer that we believe would benefit from acquiring Wrigley would be Hershey; but we view this as an unlikely outcome given the current situation," he told investors in a research note. The Hershey Co. has struggled with flattening sales and rising commodity costs since late 2006 as it spends heavily to expand its overseas presence and cut back its work force in North America. Meanwhile Monday, Wrigley said its first-quarter profit rose 18 percent, thanks to strong sales in Eastern Europe and Asia and a weakened U.S. dollar.[33]

With Wrigley's more than $5 billion in annual sales and Mars' $22 billion, the marriage will create the world's largest confectionary company, with brands ranging from Extra and Orbit gums to Snickers and M&Ms; candies. "It certainly changes the confectionary landscape," said Mitch Corwin, a stock analyst with Morningstar.[35] Forty-five person of the company's global sales come from chocolates and snacks and 46 percent come from pet food. Wrigley has global sales of $5.4 billion and distributes its brands in more than 180 countries.[16]

Both companies have issued statements enthusiastically supporting the merger, which also highlights that they are looking forward to increased growth as a result. Bill Wrigley said in his letter: "Together, we will be a company with over $27 billion in sales and more than 64,000 associates worldwide. This combined entity will be, among other things, the world's leading confectionery company, with the resources and critical mass to explore new geographies and categories that might have been beyond our reach in the past[44] As sweet as the earnings report looked, the real news was that Wrigley agreed to be acquired by Mars for $23 billion -- or 4.3 times Wrigley's 2007 net sales and 35 times last year's earnings. I had found Wrigley's valuation to be rich, given its growth trends in recent years, but the game changed quickly, because Mars clearly sees plenty of strategic benefit to acquiring Wrigley at a hefty premium.[30]

After initially telling investors that the deal would boost earnings in 2006, Mr. Wrigley later admitted that the brands -- acquired for $1.46 billion in 2005 after the deal was announced in 2004 -- needed more investment and would sap 2006 profits. Though it's public, Wrigley has some operating practices of a private company. It does not hold quarterly earnings calls and only addresses its shareholders once a year at the annual shareholders meeting.[12] Wrigley Co. has tried for years to branch out into other candies, making an unsuccessful $12 billion bid for chocolate-maker Hershey Foods Corp. in 2002 and later buying the Altoids and LifeSavers brands from Kraft Foods. It remained mostly a gum company.[35]

The lending contraction may have encouraged Mars or Wrigley to reach out to Buffett, whose company had more than $40 billion in cash at yearend, said Spier. "In normal conditions, they could have financed that in a thousand different places,'' said Spier who, along with a friend, paid $650,100 in a charity auction to have lunch with the Berkshire chairman. "It's not as easy to get financing as it was a year and a half ago, which may be why he was called to the table.''[18] The $2.1 billion investment in Wrigley would come from Berkshire's $46 billion cash reserve, which gives Buffett a strong financial position when companies come up for sale. His criteria for buying companies include having a strong management in place and a history of profitable operations, plus large sales volume.[21] "Long-term competitive advantage in a stable industry is what we seek.'' Buffett may buy more operating companies as he adds to Berkshire's investments, including a stock portfolio valued at about $75 billion on Dec. 31. Berkshire last month completed its largest cash purchase, the $4.5 billion acquisition of Marmon Holdings Inc., the Pritzker family's collection of 125 companies. Buffett, ranked the world's richest man by Forbes magazine, said today in an interview on CNBC that while he's not sure about his ability to predict commodity prices he's confident consumers will continue to chew gum. He said he enjoys the products of both candy companies, including Juicy Fruit gum.[18]

When Mars Inc. needed a few billion dollars to help fund its acquisition of Wm. Wrigley Jr. Co., it turned to investing legend Warren Buffett, a man who not only has a famous sweet tooth but also happens to be sitting on more than $40 billion in cash.[14] The Wm. Wrigley Jr. Co., a Chicago institution, will be acquired by candy giant Mars Inc. with financial help from legendary investor Warren Buffett, Wrigley announced Monday.[35] The Oracle of Omaha played Willy Wonka on Monday, joining gum outfit Wrigley and candy baron Mars in a merger that was just too sweet to resist. Sweets manufacturer Mars and billionaire Warren Buffett confirmed their joint bid for William Wrigley Jr. Co. (nyse: WWY - news - people ).[45]

The deal would marry brands that sweet-toothed Americans have munched on for decades: Mars owns Snickers and M&Ms; Wrigley's gum brands include Juicy Fruit, Orbit, Extra and Big Red. "A good time to buy a really great business is when you can do it," Warren Buffett said on CNBC Monday, adding that he understands Mars and Wrigley better than the balance sheets of most major banks.[33] Renowned investor Warren Buffett will take a minority share in Wrigley's once the deal is completed, which is expected to take up to a year. Mars is best known for its chocolate brands including Snickers and M&Ms.;[28]

Buffett's participation in the $23 billion Wrigley transaction can be seen as "a classic Warren Buffett move," said Morningstar Inc. analyst Justin Fuller, noting that the Omaha investor is taking a minority stake in "yet another iconic American consumer brand."[14] Funding for the roughly $23 billion Wrigley transaction includes about $11 billion from Mars, a $5.7 billion committed senior debt facility from Goldman Sachs Group Inc. (GS), and $4.4 billion of subordinated debt from Berkshire Hathaway.[46] Mr Buffett's Berkshire Hathaway will purchase a $2.1bn (£1bn) equity stake in the combined confectionery business at an as yet undisclosed discount to the price being paid to Wrigley investors, with further backing coming from investment banks Goldman Sachs and JP Morgan.[34] Berkshire Hathaway, Mr Buffett's investment vehicle, has agreed to provide financing to Mars for the deal alongside Goldman Sachs and JPMorgan, and will take a minority equity stake in the Wrigley subsidiary.[31] In addition to Berkshire Hathaway, Goldman Sachs and JPMorgan Chase are provided financing for the deal. Yesterday, Wrigley said its first-quarter profit rose 18 percent on strong sales in Eastern Europe and Asia, and a weakened U.S. dollar.[38]

Combined, the Wrigley's and Mars businesses will have annual sales of more than $27bn. Wrigley's board has backed the deal, which must be approved by its shareholders. "This is a great transaction at a great price," Mr Wrigley said. "We see this as a historic opportunity to preserve what is special about Wrigley in terms of value and culture while continuing to grow and develop and invest in our brands."[28]

Wrigley had rebuffed Mars several times because the price wasn't high enough, according to a person familiar with the deal, and Mars needed the financing. "They never would have been able to fund the deal on their own," the person said. J.P. Morgan even agreed to loan Mars the money to do the deal without selling chunks of the financing to other firms in a syndication -- all in order to keep the deal confidential from the confectioner's rivals. (It worked: Wrigley's stock price didn't budge until the deal was announced). The deal is also a reminder that to thrive, these banks need to lend and do deals, even if the environment is harsh and if they have their own financial issues. J.P. Morgan, for example, has $22.5 billion in unwanted leveraged loans still sitting on its balance sheet.[29] As Mars made clear, it found financing the deal difficult. With many of the banks that would normally have provided the funds rather short of readies themselves these days, Mars had to call on the famously sweet-toothed Mr Buffett to dip into his huge cash pile. In return, Mr Buffett has bought his stake in Mars' new Wrigley subsidiary at half the price Mars is paying the existing owners. Wrigley, a sleepy, family-controlled Chicago company, had any way been showing signs of waking up recently but under the ownership of Mars, Cadbury will have a real fight on its hands.[47] 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.[1] Under the terms of the deal, Wrigley will become a separate Mars subsidiary. Bill Wrigley jnr, chairman of Wrigley's board, said: "First and foremost, this is a great transaction at a great price that provides tremendous value to Wrigley stockholders. "We see this as a historic opportunity to preserve what is special about the Wrigley company in terms of values and culture, while continuing to grow and develop our associates, invest in our brands and drive long-term generational growth."[4] The agreement announced Monday has the potential to transform the globe's confectionary industry and could spawn a series of other combinations. "First and foremost, this is a great transaction at a great price that provides tremendous value to Wrigley stockholders," Bill Wrigley Jr., chairman of Wrigley's board, said in a statement. "We see this as an historic opportunity to preserve what is special about the Wrigley company in terms of values and culture, while continuing to grow and develop our associates, invest in our brands and drive long-term generational growth."[32]

• Why: Wrigley Chairman Bill Wrigley Jr. concluded it wasn't certain the company would be worth $80 a share in the future.[41] It was a double-fresh day for shareholders in William Wrigley Jr. (NYSE: WWY ) : They heard a solid first-quarter earnings report, and privately held Mars bought out the Motley Fool Income Investor recommendation for $80 a share -- about a 30% premium to where shares closed on Friday. First-quarter results beat analyst estimates on both the top and the bottom lines.[30]

The takeover proposal, in which Mars is offering Wrigley's investors $80 a share, is one of the largest global deals of recent years.[28] Mars will pay $80 cash per Wrigley share under the terms of the deal detailed in a Wrigley press release.[7] Shares in Wrigley rose 23.5 per cent to $77.13 after the $80-a-share cash deal was announced.[31] Investors are not expecting a rival bid to emerge for Wrigley because Mars's $80-a-share cash offer is 28 per cent higher than the gum maker's closing share price on Friday.[24]

Wrigley confirmed in a statement that Mars has agreed to pay $80 cash for each share of Common Stock and Class B Common Stock of the Wrigley Company in a transaction valued at approximately $23bn.[44] Mars will pay $80 cash for each share of Wrigley common stock and class B common stock -- a premium of 28 percent and 34 percent, respectively, to Wrigley's stockholders. Wrigley will keep its Chicago headquarters.[16] Mars, of McLean, Va., said Wrigley shareholders will receive $80 in cash for each share of common stock and class B common stock they hold.[48] Under the agreement announced Monday, shareholders at Chicago-based Wrigley would receive $80 in cash for each share of common stock and Class B common stock.[42]

Under the agreement, Wrigley shareholders will receive $80 in cash for each share held, a 28% premium to Friday's price.[12]

At $80 a share, the Wrigley purchase price represents a 28% premium over Wrigley's stock price. "It was a compelling offer and after numerous board meetings, we decided that this was the best possible outcome," Wrigley said in an interview with BusinessWeek.[40] The $80-per share offer is a 28 percent premium to Wrigley's Friday closing price of $62.45 and the news sent Wrigley's shares into overdrive in morning trading Monday.[32] The two sides have haggled to reach the $80-per share offer — a 28 percent premium to Wrigley's Friday closing price of $62.45.[33]

Mars and Wrigley together will control almost 28 percent of the U.S. candy market, eclipsing Hershey Co.' s 24 percent share of consumer purchases, according to Euromonitor International Inc. in Chicago, citing 2006 sales. It will also become the largest candy maker in the world, surpassing Cadbury Schweppes Plc's 10.1 percent share.[20] The gum maker's ornate towering headquarters along the Chicago River is a favorite among tourists for snapping pictures. The Chicago Cubs historic ballpark — Wrigley Field — got its name while the team was owned by the Wrigley family, which sold the franchise decades ago. Meanwhile Monday, Wrigley said its first-quarter profit rose 18 percent, thanks to strong sales in Eastern Europe and Asia and a weakened U.S. dollar.[32]

The transaction will see two of the world's largest confectioners come together and create a business generating $27bn in annual sales. Wrigley will remain a stand-alone business headquartered in Chicago and Mars will transfer its non-chocolate sugar brands, including Starburst and Skittles, to the gum giant's portfolio.[9] The combined entity, in which Wrigley would operate as an independent business, would have annual sales of $27 billion. It would include Wrigley brands such as Juicy Fruit, Orbit and Hubba Bubba, together with Mars products such as Milky Way, Snickers, M&M;'s, Uncle Ben's Rice and the Pedigree and Whiskas pet-food brands. Mars will move its sugar confectionery brands, such as Skittles and Starburst, into Wrigley, allowing it to focus on chocolate.[24] Buffett was enthusiastic Monday to be part of the Mars purchase agreement. "Those of you who know me, know that I have been a big fan of Wrigley's business model for many years, and I love their products,'' he said in a press release, adding: "When you think of a business that's easy to understand, with favorable long-term economics, and able and trustworthy management, you think of Wrigley. "Bringing together these iconic, world-class companies combines Wrigley's strengths with the deep resources and proven brand-building savvy of Mars and will result in a powerful force for innovation and growth in the global confectionery marketplace.'' Buffett views strong brands as a sales advantage over competitors, backing up his belief with his ownership of such brands as Coca-Cola, Fruit of the Loom, Dairy Queen and Geico.[21] Bill Wrigley Jr will remain executive chairman of Wrigley, reporting to Paul Michaels, the global president of Mars. Mr Michaels said: "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." He added: "We are looking forward to continuing on our path of growth by jointly developing those values even further." Mars will transfer its non-chocolate confectionery brands including Starburst and Skittles to the Wrigley subsidiary.[31] The Wrigley family would no longer hold any equity in the company. "I have talked to some family members, and I anticipate that they all will be very supportive of this, because it makes sense for really everybody," said Bill Wrigley Jr., the company's executive chairman and a member of the fourth generation of the family to lead the business. "It's not just about selling out for dollars. It is more about what is the right thing and how can we grow going forward." Mars is a tightly controlled, privately held company, one of the last of its kind in the confectionery business and one of the largest family controlled companies in the nation. It is controlled by the Mars family of Northern Virginia.[38]

Wrigley's leadership team remains in place -- Bill Wrigley Jr. stays on as the company's executive chairman -- and the maker of Juicy Fruit, Orbit and Extra gums will continue as a standalone subsidiary based in Chicago.[36]

William Wrigley Jr., from the family that founded the company 107 years ago, is executive chairman and chairman of the board.[21] Mr. Michaels is an outsider who joined Mars more than 10 years ago and has been global president for the past four years. The Wrigley company made its first move away from family control in October 2006, when Mr. Wrigley announced he would step down as CEO to become executive chairman.[12]

Wrigley will become a separate, stand-alone subsidiary of Mars, but the deal also means that Bill Wrigley will continue serving as the company's executive chairman.[44] There was always a Wrigley in the chief executive's office until October 2006, when Bill Wrigley stepped aside as CEO to let former Nike executive William Perez run day-to-day operations. Wrigley remains chairman and controls a trust containing much of his family's holdings; the family effectively controls the shareholder vote over the merger, securities filings indicate. Wrigley said he didn't talk with family members prior to the board's approval of the deal Sunday, but "I sense great support from the family." Talks began around noon April 11 in the home of Paul Michaels, head of McLean-Va. -based Mars, which also makes pet food and Uncle Ben's rice, and counts a candy bar plant on Chicago's northwest among its many factories.[35]

Mondays announcement sent Wrigleys shares into overdrive, reaching an all-time high. "I think this is a bold move, but beyond that, I think this is the right move," said Wrigley Chief Executive Bill Perez. Executives said Wrigley would gain little benefit in weathering a run-up in commodities costs, but said the deal would allow the company to enhance its sales, marketing and distribution systems.[22] The tie-up has sparked speculation of a merger between Hershey and Cadbury in an attempt to create a company big enough to rival the Mars-Wrigley firm. Wrigley has been under pressure in recent months as rival Cadbury has stepped up its assault on the chewing-gum market, with a worldwide marketing blitz for its Trident brand. Cadbury said earlier this year it was winning the chewing-gum war, revealing that Trident was now a bigger brand than its Dairy Milk chocolate, after a 26 per cent surge in sales last year.[4] Wrigley, based in Chicago and headed by former Nike executive William D. Perez, had sales of $5.4 billion and profit of $632 million last year.[21] Wrigley, which has annual sales of $5.4 billion and employs about 16,000 people, has been a public company since 1923. In discussions with Mr. Wrigley, Mr. Michaels argued that the two companies would fit well together because of their similar histories and shared values, according to people familiar with the matter.[12]

Mr. Dimon himself approved an approximately $11 billion loan package to longtime client Mars to help the candy maker capture Wrigley. And, the approval wasn't accompanied by a lot of hand-wringing; this one took the approval of only about five people and just five days to arrange, according to a person familiar with the deal.[29] Privately-held Mars, the brand behind Snickers and M&M;'s, is still owned by the Mars family. Thanks to their stake in the candy maker, Forbes estimated the net worth of Forrest Mars Jr., Jacqueline Mars and John Mars at $14 billion each in March. Breath-sweetening Wrigley has its iconic Doublemint gum, as well as Altoids, Extra and Eclipse.[45] Mars, which makes candy like Snickers and M&M;'s, is privately held by the secretive Mars family. Thanks to their stake in the candy maker, Forbes estimated the net worth of Forrest Mars Jr., Jacqueline Mars and John Mars at $14 billion each in March. The trio's grandfather started baking chocolates from his kitchen in 1911.[27]

The Wrigley family stands to receive more than $4.33 billion for its stake in the company. [35] At closing, Berkshire Hathaway will make a $2.1 billion minority equity investment in the Wrigley company subsidiary of Mars.[37] In a statement, Wrigley said yesterday that Berkshire Hathaway would buy a stake worth $2.1 billion or about 10 percent.[38]

The deal, announced Monday, will give Buffett's Berkshire Hathaway Inc. a stake of more than 10 per cent in Wrigley, which will become a separate Mars subsidiary.[15] If that's not enough to convince you, Warren Buffett's Berkshire Hathaway (NYSE: BRK-A ) (NYSE: BRK-B ) is in on the deal, providing funding in the form of $4.4 billion in subordinated debt.[30] The deal has been part-funded by investment fund Berkshire Hathaway, run by billionaire investor Warren Buffett, which has put up $4.4bn.[9]

Billionaire Warren Buffett's Berkshire Hathaway Inc. is making a minority equity investment in the new Wrigley subsidiary. Wrigley produces such gums as Extra, Eclipse, and Orbit.[42] Calls to Wrigley and Berkshire Hathaway were not immediately returned. The merger of Mars, maker of M&Ms;, Snickers bars and other candy, and Wrigley, which produces such gums as Extra, Eclipse, and Orbit, could force other snack companies to merge to compete with the new confectionary giant.[5]

The transaction, expected to close in six to 12 months, unites two icons of the U.S. candy business: Wrigley, maker of the eponymous chewing gum, and Mars, the closely held company behind Snickers chocolate bars and M&M;'s.[6] The transaction, expected to close in six to 12 months, joins two of America's ubiquitous brand names: Wrigley, maker of the eponymous chewing gum, and Mars, the closely held company behind Snickers chocolate bars and M&M;'s.[12]

The makers of Mars Bars have teamed up with billionaire investor Warren Buffett to absorb the world's biggest chewing gum manufacturer, Wrigley.[23] Peter J. Thompson, National Post File Photo Warren Buffett commented, "I understand a Wrigley or a Mars a whole lot better than I understand the balance sheet of some of the big banks" when asked about the investment potential of downtrodden U.S. NEW YORK - Warren Buffett, the billionaire investor known for his love of iconic U.S. junk-food brands, is snapping up a piece of the country's biggest gum maker.[25]

PARIS (AFP) — Warren Buffet, the world's richest man, and Mars Inc, the U.S. food and confectionary giant, plan to buy iconic U.S. chewing gum maker Wrigley for more than 22 billion dollars (14 billion euros), the Wall Street Journal reported Monday.[26] Confectionery giant Mars is set to buy U.S. firm Wrigley's, best known for its chewing gum, for $23bn ('11.5bn).[28] Consumer goods group Mars has agreed a deal to buy chewing gum giant Wrigley for $23bn (£11.5bn).[34]

"I look at it as two companies that see the opportunity to create a true global confectionary powerhouse," said Morningstar analyst Mitchell Corwin. "They become No. 1 in chocolate and No. 1 in chewing gum with a strong international presence and growth in emerging markets." Wrigley, which has been publicly traded for 80 years, will keep its headquarters in Chicago, a city with whom its name has been synonymous for decades.[22] Set up in Chicago by William Wrigley in 1891, the company started out selling soap and baking soda. A year later, he added chewing gum to the packets as a sales gimmick.[23] Analysts said the greatest synergies were expected to come from rationalisation of the Mars and Wrigley sales forces. Martin Deboo, an analyst with Investec, said: "The real cost synergies will come from Mars's route to market such as combining the two sales forces." The company, which sells gum under brands such as Extra, Orbit and Airwaves in the UK, was founded in Chicago in 1891.[31]

For the first time since Wrigley started selling gum in 1892, the Wrigley family will no longer have an ownership stake in the company. Wrigley hadn't put itself up for sale when Mars, one of the world's largest candymakers, came courting earlier this month.[35]

The purchase of Wrigley will further cement Mars' position as the world's largest candy maker and put it in a better position to compete with rivals like Hershey (nyse: HSY - news - people ). It will also offer Mars synergy opportunities at a time when cost control becomes increasingly important because of rising ingredient costs. Both of those benefits could help increase the value of the Mars family's company.[27] Early Monday, Mars, which is closely held by the wealthy Mars family, said it had agreed to buy Wrigley (nyse: WWY - news - people ) for $80 per share.[27] Wrigley shares jumped 23 per cent on the New York Stock Exchange, and U.S. stocks edged higher on optimism about the deal.[15]

Wrigley will become a private, stand-alone company owned by Mars. "Buffett's courted that business many times -- he uses it to demonstrate what he means by dominant brands -- but it has never been cheap enough for him to buy,'' said Guy Spier, principal at hedge fund Aquamarine Funds LLC, which owns Berkshire shares. "He's saying, `Great, I'll finance it, you've got to reward me for it.'''[18] Like many families that own businesses for generations, the Wrigley family, which controls at least two-thirds of Wrigley's supervoting B shares, had become less engaged in the company. Mr. Wrigley -- who controls 45% of the B shares through trusts and is the only member of the family who's deeply involved in the business -- said he didn't have much discussion with relatives during the negotiations. The move is a bold one for the Mars family, led by brothers John Mars and Forrest Mars Jr., both former presidents of the company.[12] Though the company is publicly traded, the majority of Wrigley's shares are still controlled by Chicago's Wrigley family, whose name also graces the Chicago Cubs baseball stadium and a well-known Michigan Avenue landmark building. Reuters contributed to this article.[45]

According to the February filing with the U.S. Securities and Exchange Commission, billionaire Wrigley owns 34.1 million shares and options in the Chicago company.[27]

Shares of Wrigley, which will become a stand-alone subsidiary of privately held Mars and remain in Chicago, soared 23% after the announcement, closing up $14.46 at $76.91.[39] Mars is paying $80 a share for 117-year-old Wrigley, maker of Juicy Fruit and Doublemint gum.[18] The all-cash offer to buy the gum maker is for $80 per share, or $23.0 billion.[45] Analysts polled by Thomson Financial expected a profit of 55 cents per share on revenue of $1.39 billion.[33] The revenue growth meant that net earnings for the quarter of $0.61 per diluted share were up 17 per cent from the year ago period. According to Reuters the merger is likely to prompt Cadbury Schweppes into re-starting talks with Hersey Co. An Investec Securities analyst is quoted as saying: " Cadbury will have to look at its options and the most obvious is to re-open talks with Hershey over a merger."[44] Shareholders with 100 Cadbury Schweppes shares will receive 64 Cadbury shares and 12 DPSG shares when the group demerges. Cadbury also reiterated its long-term guidance today of revenue growth in the 3 per cent to 5 per cent range, high single-digit earnings per share growth and capital expenditures of about 5 per cent of sales.[31]

Earnings per share jumped more than 17% to $0.61 as sales improved an impressive 15.8%. Growth was broad-based, highlighted by a 25% sales increase in Asia/Pacific, where the company said it "strengthened its position as the No. 1 confectioner" in China. Top-line growth in its other key international segment came in at 20%, led by strong trends in Russia, Germany, Poland, and India.[30]

The company earned $168.6 million, or 61 cents per share during the January-through-March quarter. That's up from $142.7 million, or 52 cents, last year.[33]

First-quarter net income climbed to $168.6 million, or 61 cents a share, compared with $142.7 million, or 52 cents, a year earlier, Wrigley said today in a separate statement.[20]

Mars reported $22 billion in sales during 2007, while Wrigley saw $5.4 billion in sales during the year.[43] The sale price would represent a sizable premium above Wrigley's stock market value, which was about $17.3 billion Friday.[5] Mars is offering a substantial premium for Wm Wrigley Jr, which had a stock market value of about $17.3 billion at Friday's $62.45 closing price.[31]

Goldman Sachs Group Inc. and JPMorgan Chase & Co. are also providing financial backing for the $80-per-share purchase, which is due to take place within six to 12 months. It would be a 28 percent gain for Wrigley shareholders from Friday's stock price.[21] In addition to buying $4.4 billion of Mars's subordinated debt, Omaha, Nebraska-based Berkshire will pay $2.1 billion for an interest in Wrigley at an unspecified discount to the price being paid to shareholders, according to a statement today by Chicago-based Wrigley.[18] Wrigely's shareholders are being offered $80-a-share, a 28.1pc premium to its $62.45-a-share closing price on Friday night under a deal that has been recommended by the boards of both Mars and Wrigley.[34]

We are a very, very junior partner, although we will have about $6.5 billion in it." As the deal came together, a roughly 12-person team on the Wrigley side was calling each other so frequently that Mr. Perez kept with him a small laminated card with each of their phone numbers. Last week, Mr. Wrigley went to Wyoming to meet with members of the family that controls Mars to get to know them, he said.[12] As part of the deal, JPMorgan is lending $11.5 billion to Mars and Goldman Sachs, which is advising Wrigley, is lending the remaining $5.7 billion.[24]

The purchase will be financed with $11 billion from Mars, $4.4 billion from Berkshire and $5.7 billion from Goldman Sachs Group Inc. Berkshire will also buy a $2.1 billion stake in the Wrigley division once the purchase is completed.[20] Berkshire will provide $4.4 billion in subordinated debt and at closing will invest $2.1 billion in Wrigley, which will become a standalone subsidiary of Mars.[2] Under the agreement, Wrigley, with its $5.4 billion in annual sales, would become a separate, stand-alone subsidiary of Mars.[38] In a separate statement Wrigley announced record first quarter sales of $1.45 billion, up 16 per cent from the year-ago quarter.[44]

Mars is a family owned company based in McLean, Va., and has global sales of about $22 billion each year. It was founded in 1911.[5] The $23 billion deal will create a company that will reshape the global sweets business and got done because the three strongest financial firms in the U.S. wrote the checks. It also sends two positive signals to the market: First, bankers are willing to lend, albeit to good clients.[29] The Omaha, Neb. -based company also offered $4.4 billion of subordinated debt to fund the deal. "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," Paul S. Michaels, global president of Mars, said. "We are looking forward to continuing on our path of growth by jointly developing those values even further."[38]

Assuming that shareholders approve the deal, the merged group would overtake Cadbury Schweppes as the world's biggest confectionery company, giving it 14.4 per cent of the global market, against Cadbury's 10.1 per cent.[24] Analysts said that if the deal went ahead, Mars would be the biggest player in the global confectionery industry with a market share of 14.4 per cent, overtaking Cadbury's 10.1 per cent.[31]

The deal could also trigger further consolidation in the global confectionery industry. Mars's rivals Cadbury Schweppes and Hershey may be forced to rekindle the merger talks that they abandoned last year.[31] The deal has increased speculation that Hershey and Cadbury Schweppes could merge to compete with Mars/ Wrigley's increased clout. The two parties discussed a tie-up last year, but those talks came to nothing.[24] The most likely deal to feel the pressure after the Mars- Wrigley merger is the one between Hershey and Cadbury Schweppes, which have held talks for several years, but were unable to reach an agreement.[10]

The blockbuster deal could put consolidation pressure on other candy makers, in particular Lon-don-based Cadbury Schweppes PLC and Pennsylvania-based Hershey Co. The two companies have had unsuccessful takeover talks in recent years.[25] If the buyout receives regulatory and shareholder approval, the combined companies would leapfrog over Britains Cadbury Schweppes as the worlds largest confection maker a move thats already fueling speculation that the deal could spawn a round of candy industry consolidation.[22]

The trust that controls Hershey discussed ways to merge the chocolate company with Cadbury in a way that wouldn't decrease the trust's ownership, the Wall Street Journal reported last year. A combination of Hershey and Cadbury probably won't happen, given the pressure that Cadbury faces from its shareholders to improve performance, Howard said. "The idea that Cadbury's board would approve a sizeable deal and pay a significant control premium to acquire a weak performer in a slow-growing, developed market is extremely unlikely,'' she wrote.[20]

The trust that controls Hershey got cold feet and the deal fell through at the last minute. Some analysts and investors, though, felt Mr. Wrigley was a bit too risky at times and that he and his board realized they needed the expertise of a more seasoned consumer-products executive. Mr. Perez was brought on at a time when the Wrigley company was struggling to integrate LifeSavers and Altoids -- its biggest acquisition ever.[12] Although Wrigley will be a standalone unit of Mars, the two companies will have "opportunities to get efficiencies," said Standard & Poor's analyst Tom Graves. Both sell through similar retail outlets and the deal would give them more bargaining power with retailers, as well as opportunities to work together on their distribution systems, he said. During a conference call, Wrigley executives said the price they ultimately agreed on wasn't the initial price offered by Mars. The initial conversation on the deal was on April 11, they said, and "there was some back and forth" after that conversation.[46]

The deal brings together companies controlled by two dynasties -- the Virginia-based Mars family and the Wrigleys, of Chicago. Mr Buffett is well-known for his preference for strong consumer brands; however, he usually embarks on acquisitions without a partner.[31] Wrigley's board was concerned about the certainty of the financing for the deal given the tight credit markets, said William Perez, Wrigley's president and CEO. The Mars clan knew early on that it would need a partner to complete the transaction. Mr. Buffett fit the bill, both for his deep pockets and reputation for discretion. Mr. Wrigley said that part of the reason Mr. Buffett got involved was because "he's one of the few people in the world with access to large sums of capital" and because "he tends to do things very quickly and very efficiently."[12] Large deals are having a hard time getting done and Mars is probably looking for certainty on the financing," said Ken Wasik, an investment banker who heads the consumer products group at Jefferies Group Inc., about Berkshire's role in the Wrigley transaction.[46] Aside from Berkshire, financing for the Wrigley deal is being provided by Goldman Sachs Group and JPMorgan Chase & Co., Mars said in a news release.[15] Buffett's Berkshire Hathaway (nyse: BRKA - news - people ) will provide financing for the deal, and Mars will manage the newly merged company.[45] With the debt markets jittery amid the housing-market crisis, Mars reached out to Mr. Buffett and his deep-pocketed holding company, Berkshire Hathaway Inc., to help finance the deal.[25]

Mars announced Monday that it planned to acquire the Chicago-based gum and food company with the aid of Warren Buffet, whose Berkshire Hathaway investment firm would be a minority investor in the deal.[43]

The merger will unite popular candy brands; Warren Buffett's investment company Berkshire Hathaway will provide financial backing.[7]

Buffett, 77, built Berkshire from a failing textile maker into a $200 billion investment and holding company with subsidiaries selling products from candy to insurance.[18] Buffett has built Berkshire over four decades from a failing textile maker into a $195 billion holding company with businesses ranging from candy making to insurance.[20]

Cadbury, the maker of Dairy Milk chocolate, bought Pfizer Inc.' s Adams candy unit for $4.2 billion in 2003 to become the world's second-largest maker of chewing gum.[20] Wrigley's dominates the global chewing gum market despite growing competition from rival Cadbury Schweppes in recent years.[28] Mars, founded in 1911, makes M&M;'s, Snickers and Dove Bars, as well as Uncle Ben's rice and pet food lines. It controls about 19 percent of the U.S. candy market, second behind Hershey, said market researcher Euromonitor International, citing 2006 statistics. Wrigley, founded in 1891, makes Orbit, Life Savers and Altoids mints, along with its namesake chewing gums.[8] In the United States, Mars and Wrigley together would control almost 28 percent of the candy market, eclipsing the Hershey Co.' s 24 percent share of consumer purchases, according to Euromonitor International, of Chicago.[13]

The Wrigley deal put particular focus on Hershey, which has lost market share, grappled with high commodity costs and struggled to compete with makers of premium chocolate.[46]

Since being founded in 1891, Wrigley's has been run by family members and current boss Bill Wrigley will remain as chairman following the deal. Its principal brands include Spearmint Gum and Orbit.[28] The deal announced yesterday would marry brands Americans have munched on for decades: Mars owns Snickers and M&Ms; Wrigley's gum brands include Juicy Fruit, Orbit, Extra and Big Red. It also owns Life Savers hard candy.[13] Representatives for the companies did not return calls for comment, but in a joint statement, Mars and Wrigley said the combined firm would have brands in six different areas: chocolate, other confectionery, gum, food, drinks and pet care. Mars currently counts such brands as Dove, Milky Way and M&Ms; among its assets, while Wrigley owns Doublemint, Juicy Fruit and Big Red, among others.[43]

In a company statement Wrigley said that the merger combined Wrigley's strengths with the resources and proven brand-building know-how of Mars and will result in "a powerful force for innovation and growth in the confectionery marketplace." Mars said that the transaction would help the company strengthen and diversify its confectionery business, and enhance its potential for growth in the chocolate, non-chocolate confectionery and gum categories.[44] Now, Wrigley will become a subsidiary of the biggest family-owned company in the U.S., Mars Confectionery, which has itself been trading since 1911. Wrigley will continue to focus on gum, Mars will stick to chocolate and both businesses should benefit.[23] Existing users, please login at the top of the page. Summary: Wrigley chairman Bill Wrigley has said that the rest of the global confectionery industry will be mulling their next moves following the agreement to sell the U.S. gum giant to rival Mars.[49] The deal, subject to regulatory approval, is expected to be completed within six to 12 months. Wrigley, which generates most of its sales outside the U.S. and has expanded into chocolate and sweets, will bolster Mars's global reach.[31]

With the sale of Wm. Wrigley Jr. Co. to Mars Inc., Chicago loses ownership of the city's largest confectioner and another Fortune 500 company. It's a blow to civic pride, but the company will keep its presence.[36] Mr. Buffett will get the minority stake in Wm. Wrigley Jr. Co. as part of a planned US$23-billion takeover of the company by candy-bar manufacturer Mars Inc. that was unveiled yesterday.[25]

MUMBAI (Thomson Financial) - Moody's Investors Service said it has placed Wm. Wrigley Jr. Co.' s 'A1' senior unsecured debt rating and 'Prime-1' short-term rating under review for possible downgrade after the confectioner said it has agreed to merge with candy maker Mars Inc.[37]

Combined, the companies will have deeper reach and more pricing power with retailers. Wrigley Co. began selling gum 116 years ago after founder William Wrigley Jr. started giving away gum as an incentive to buy the baking powder he was peddling. People liked the gum more, so he switched, and a dynasty was born with the rollout of Juicy Fruit and Wrigley's Spearmint.[35] Despite being one of the richest men in the world with an estimated net worth of US$62-billion, the famously frugal Mr. Buffett is known for dining out at Dairy Queen -- owned by Berkshire -- and sipping Cherry Cokes. When asked during the CNBC interview whether downtrodden banks and other financial institutions also might make good investments these days, Mr. Buffett said: "I understand a Wrigley or a Mars a whole lot better than I understand the balance sheet of some of the big banks. I know what I'm getting in this, and some of the larger financial institutions I really don't know what's there." Family owned Mars, founded in 1911, will add its Starburst and Skittles candies to Wrigley, which makes Lifesavers and Altoids. Mr. Buffett said he's been a longtime fan of both Wrigley and Mars. "I like Spearmint and Juicy Fruit gum," he said on CNBC. "I love the new Dove bar.[25] Joel Glenn Brenner, author of The Emperors of Chocolate, said the Mars family had always been satisfied to let the company's products do the talking. "It's a private company, and they feel very strongly about the private part," he said. "They don't want the company to go public - ever." Founded by Frank Mars, the company expanded under his son, Forrest, who died in 1999. It now is run by Frank Mars' grandchildren. Speaking on CNBC, Mr Buffett said he liked Wrigley's Spearmint and Juicy Fruit gums, "loves" Mars' Dove bar and had "gotten into Skittles lately", also made by Mars.[39]

Buffett said, "Bringing together these iconic, world-class companies combines Wrigley's strengths with the deep resources and proven brand-building savvy of Mars and will result in a powerful force for innovation and growth in the global confectionary marketplace." Mars said in a prepared statement that the combination will allow Wrigley to " retain its character and focus as a stand-alone business while being part of a larger family corporation that has a strong heritage and an entrepreneurial and global culture." [6] "When you think of a business that's easy to understand, with favorable long-term economics, and able and trustworthy management -- you think of Wrigley," Buffett said in a statement issued by Wrigley. "Bringing together these iconic, world-class companies combines Wrigley's strengths with the deep resources and proven brand-building savvy of Mars and will result in a powerful force for innovation and growth in the global confectionery marketplace."[2]

Michaels and Wrigley separately paid visits to the Omaha offices of billionaire investor Warren Buffett, who is known to like companies that focus on long-term growth and sport strong international sales.[35] Warren Buffett is helping confectionary giant Mars to take over chewing gum group Wrigley.[50] Mars "is primarily a chocolate company and we are primarily a chewing gum company,'' Bill Wrigley, Wrigley's chairman, said today on a conference call.[20] PK chewing gum is just one of a long list of brands sold by the Wrigley Company in more than 180 countries.[23]

Wrigley will remain chairman of the Wrigley subsidiary, and Perez will remain chief executive. Wrigley said he doesn't anticipate any major changes in employment in Chicago. The company has 1,150 employees at five locations, including its Michigan Avenue headquarters. Some jobs could eventually be added in Chicago as Mars moves its non-chocolate confectionary brands including Skittles and Starburst to Wrigley's confectionary portfolio, Wrigley said.[35] The terms of the transaction have been unanimously approved by the Wrigley board. Executive chairman Bill Wrigley said: 'First and foremost this is a great transaction at a great price that provides tremendous value to Wrigley stockholders.[11] "There is no question that the financial markets are very challenging right now," said Executive Chairman Bill Wrigley Jr. during a conference call Monday. "Coming up with the capital to make this deal work was a challenge."[46] Bill Wrigley Jr. will remain executive chairman of Wrigley, reporting to Michaels. He will work closely with President and Chief Executive Bill Perez and the current Wrigley management team.[6]

Chairman Bill Wrigley Jr said: '''There'''s no question that the financial markets are very challenging right now and coming up with the financing was a challenge.''' Which is why people with deep pockets and large savings piles, like Mr Buffett, are able to command such attractive terms in return for their support.[50]

William Wrigley Jr., whose great-grandfather started the firm, said selling out the family's interest didn't drive the deal. "I'm not going to call agonizing, but there was a thought-provoking process I went through, and not an easy one from an emotional standpoint," he said in an interview with the Tribune. The deal was clearly best for shareholders, he said.[35] Mars, which is 100% owned by the Mars family, had known for some time that it would one day woo Wrigley, people familiar with the matter say. "It was a matter of when, not if," said one person involved in the deal.[12] The deal will make the combined group into the largest confectioner in the world, reports The Times, with a 14.4% market share, pushing Cadbury Schweppes into second place on 10.1%. Mr Buffett is well known for his general fondness for the sector, which he believes is about as recession-proof as you can get. It'''s a good thing too, because he also expects that '''the recession will be longer and deeper than most people think ''' this will not be short and shallow.''' This is a view that commentators are gradually coming round to ''' at least as far as the U.S. goes.[50] The deal, which is backed by billionaire investor Warren Buffett, will change the shape of the global confectionery market and could trigger the re-opening of merger talks between Cadbury and Hersheys.[34] The good thing about not following the herd, is that in the long run, it delivers you opportunities that no one else can take advantage of. Warren Buffett, largely seen as one of the world'''s top investors, spent most of the credit boom sitting on his hands. Sure, he made a few deals, but nothing spectacular. Largely, while everyone else was borrowing like mad, he amassed an even bigger cash pile than he already had.[50]

April 28 (Bloomberg) -- Billionaire Warren Buffett's latest investment, committing $6.5 billion to another consumer goods company, may pay off even as the U.S. economy slows.[18] Mr Buffett, who unseated Bill Gates last month as the world's richest man with an estimated fortune of $62 billion, also owns big stakes in Tesco, Coca-Cola, Kraft Foods, Johnson & Johnson and the Washington Post. Josh Lerner, Professor of Investment Banking at Harvard Business School, said: "This is classic Warren Buffett, taking advantage of the situation."[24]

WASHINGTON ( Map, News ) - With its proposed $23 billion acquisition of Wrigley, McLean-based Mars Inc. is poised to double not just its refreshment, but its holdings in the confection arena. [43] Mars will also assume less than $1 billion of Wrigley debt. Executives said family owned Mars first approached Wrigley with their unsolicited bid in April 11.[33]

In return, Buffett gets to buy a 10 percent-plus interest in Mars' Wrigley subsidiary for $2.1 billiona discount to the price Mars itself will pay for Wrigley's stock.[35] Buffett will get more than 10 percent of Mars's Wrigley unit. Mars, the maker of M&Ms; and Snickers, will add its Starburst and Skittles candies to 117-year-old Wrigley's Lifesavers and Altoids brands. "It's a great price,'' said Thomas Burnett, director of research at New York-based Wall Street Access.[20]

"There's really nothing that can go wrong with something like the Wrigley and Mars brands." As a result of the deal, Wrigley will become a stand-alone subsidiary of Mars, and will take control of all Mars' non-chocolate confectionery brands such as Starburst and Skittles.[34] The combined business will employ about 64,000 staff and control a wealth of top brands. As part of the deal, responsibility for Mars' existing sweets range, such as Starburst and Skittles, will transfer to Chicago-based Wrigley's. As well as its chocolate business, Mars owns a range of food and household goods including Uncle Ben's rice and Whiskas cat food.[28]

Once Wrigley is absorbed into Mars - the deal is expected to close in the next six to 12 months, the companies say - it ceases to be a publicly traded company.[39] • What Now: Mars has paid a rich price, but with Wrigley becoming a separate unit of a private company, the success or failure of the deal will be harder to measure.[41]

By gobbling up Wrigley, Mars will overtake Cadbury as the world's biggest sweety company, with 14 per cent of the global market, compared with Cadbury's 10 per cent.[47] Today, the Wrigley Company is making a momentous and exciting announcement about our future as a global confectionery company.[51]

If approved, the Wrigley Company will become a separate, stand-alone subsidiary of Mars, with me serving as Executive Chairman of the Wrigley Company, our current leadership team in place, and an understanding that we will manage.[51] Wrigley will remain executive chairman and officials said the company's executive team would likely stay in place.[33]

Bill Wrigley Junior will remain executive chairman of Wrigley, and will report to Paul Michaels, who is Mars' global president.[34]

The two companies have haggled to reach the $80-a-share offer. "I think this is a bold move, but beyond that, I think this is the right move," said Wrigley Chief Executive Officer Bill Perez.[38]

The purchase price is a 28% premium of Wrigley's closing share price of $62.45 on Friday, Mars said.[48] Wrigley shares surged 23.2%, or $14.46, to $76.92 during trading in New York.[45] Wrigley shares rose $14.52, or 23.3 percent, to $76.97 in afternoon trading.[33] Wrigley shares soared 21 percent, or $13.55, to $76.00 in premarket trading.[5]

Wrigley shares rose $14.46, or 23.2 percent, to close at $76.91 yesterday.[38]

Shares in Wrigley traded up $14.54 at $76.99, implying that investors believe the premium being paid by Mars is enough to gain control.[34]

Wrigley separately reported fiscal first-quarter earnings of 168.6 million dollars, or 61 cents a share, on sales of 1.45 billion.[1] The combined company would have $27 billion in annual sales and 14 percent of the world's candy market.[13] Today Mars has expended into pet foods, rice and drink vending equipment and is the eighth-largest private company in the U.S., with annual sales of $21 billion.[27]

There has been increasing speculation that the demerger of Dr Pepper Snapple Group (DPSG), Cadbury's U.S. drinks business, will trigger bids for the confectionery giant. The company, which is set to demerge DPSG next month, announced the pricing today of its $1.7 billion senior notes offering, which will be used to finance the spilt.[31]

WSJ's Matthew Karnitschnig and Dennis Berman discuss plans by Mars to acquire Wrigley for about $23 billion. [12] For bankers starved of deals, the $23 billion cash acquisition is a very welcome treat.[47] ConAgra said it would itself finance $525 million of the purchase price through the receipt of three tranches of debt securities. In the near term, there could be more of these deals that tap other sources of funding, said Wasik. In the long term, debt markets should improve and " markets should be returning to normalcy where such deals can be done with certainty," he added. It isn't just mergers and acquisitions for which companies need financing. Borders Group Inc. (BGP) said in March that the troubled credit markets had closed off usual avenues of financing, and said it had suspended its dividend.[46] In the transaction, closely held Mars is funding $11 billion of the purchase price, and investment banker Goldman Sachs Group is committing $5.7 billion in senior debt financing.[14]

A key figure behind the transaction was Goldman Sachs partner Byron Trott. Mr. Trott has worked for Mars and Wrigley and is a favorite of Mr. Buffett, who said of the banker in his most recent investor letter: "I trust him completely." People involved in the transaction say these relationships were crucial to its success.[12] The transaction, which is subject to shareholder and regulatory approval, is expected to close in six to twelve months and result in Wrigley (nyse: WWY - news - people ) becoming a privately held subsidiary of Mars.[37]

Mayor Daley said the acquisition won't hurt Chicago's reputation as unofficial candy capital of the world. "They think better management, better quality control and a much better, flexible system for their company," he said. "We're excited about this. It's great for the Wrigley shareholders.[36] Some shareholders are also hopeful the much larger Mars will be able to leverage Wrigley's brands in ways the smaller company was never able to pull off. "The two together will be more powerful at placing their brands at the checkout counter," says Morris.[40] Berkshire is the largest shareholder of Coca-Cola and Kraft Foods Inc. and the No. 4 investor in medical products company Johnson & Johnson. "Possessing a powerful worldwide brand is essential for sustained success'' in some lines of business, Buffett wrote in his annual letter to shareholders in February, explaining his preference for companies with a "moat'' protecting them from competitors.[18]

"There's really nothing that can go wrong with something like the Wrigley and Mars brands,'' Buffett, 77, Berkshire's billionaire chief executive officer, said today in an interview on the CNBC television network. "People are eating more and more of their products every day.''[20] Yesterday Mr Buffett forecast that the recession would be longer and deeper than many expected and added: "There's really nothing that can go wrong with some things like the Wrigley and Mars brands. People are eating more and more of their products every day."[24]

Goldman banker Byron Trott, an adviser to Wrigley and a longtime adviser to Mr. Buffett, made the connection, according to two people familiar with the deal.[29] A longtime admirer of Mars, Mr. Buffett readily agreed. In an interview with CNBC, Mr. Buffett said he got involved in the deal because the two companies have great brands. "I've been conducting a 70-year taste test. and they met the 70-year taste test," Mr. Buffett said. "The Mars people asked me about participating in this, and we are financing.[12]

Mars has agreed to buy confectionery rival Wrigley in a deal worth US$23bn, the companies have announced today (28 April).[9] The first point to make is that the deal will definitely go ahead, unchallenged. Mars and Wrigley clearly both want it and are not too dissimilar culturally, in terms of their family and U.S. roots.[9]

The gum makers ornate towering headquarters along the Chicago River is a favorite among tourists for snapping pictures. The Chicago Cubs historic ballpark Wrigley Field got its name while the team was owned by the Wrigley family, which sold the franchise decades ago.[22] The family name has become synonymous with Chicago. Tourists take photos of the company's towering headquarters, and the local ballpark, Wrigley Field, got its name when the family owned the Chicago Cubs baseball team.[23] After the buyout is completed in six to 12 months, Wrigley would become a subsidiary of McLean, Va. -based Mars. Its headquarters will stay in Chicago, where the business has operated since it was founded by the Wrigley family in 1891.[33] "The Wrigley family certainly has been an important part of Chicago history for many years," said Tim Samuelson, a Chicago cultural historian. "And while its a shame to see one of the old companies go out of family ownership, I think the Wrigley presence will stay around for a long time by the legacy they left around."[22]

Wrigley family members ran the company until Perez took the top executive position in 2006.[21] Founded in 1891, the company has been led by four generations of the Wrigley family.[5]

Analysts have speculated that Pennsylvania-based Hershey, which is owned by a family trust that has long resisted change, would now be forced to heat up long-simmering merger talks with Britain's Cadbury Schweppes to fend off the combined might of Mars and Wrigley.[39] "Our guess is that (Hershey) will rise today on a belief that Hershey, pressured by a giant Mars-Wrigley competitor, will be forced to combine with Cadbury's confection arm," Bear Stearns analyst Terry Bivens wrote in a research note to investors early Monday. In the longer term, he believes thinks Hershey will continue to underperform. "It will take a long time - as in years, if ever, for the majority-owning Hershey Trust to agree to any sale of the company," he said.[46]

The report added that the Mars-Wrigley merger, with combined annual sales of over $27 billion, is expected to " focus the minds of executives at Hershey."[44] Based on early-morning trading, the sale has increased the value of Wrigley's stake by $498.1 million.[27] Wrigley closed Friday at $62.45, and sold for $76.91 at 4:15 p.m. in New York Stock Exchange composite trading.[18] Shares rose 23% to close at $76.91 in 4 p.m. composite trading on the New York Stock Exchange.[12]

Earlier, shares reached a 52-week high of $77.75. "It's right up his alley," said Don Yacktman, president of Yacktman Asset Management, of Buffett's role. "He's paying up for this thing, but each of these companies is highly profitable and it makes great long-term sense from a business standpoint." [46]

What does Mr Buffett get out of it? A 19% chunk of Wrigley, for the trifling sum of $2.1bn ''' pretty much half-price.[50] The offer represents a premium of 28.0% to Wrigley's Friday closing price of $62.45.[45] The purchase price values Wrigley at 32 times estimated 2008 profit, compared with about 18 times earnings for the Standard & Poor's 500 Packaged Foods Index, according to Bloomberg data. "This valuation looks extremely rich,'' Alexia Howard, an analyst with Sanford C. Bernstein in New York, said in a research note today. Wrigley hasn't traded at such a multiple since 1998, she said.[20] Wrigley and Mars executives had talked a couple of years ago about a strategic partnership, but nothing came of it. This time Mars made its pitch over sandwiches, and for two weeks the executives negotiated a price.[35]

Mars will own in excess of 80 percent of Wrigley. Wrigley said he expects a "high degree of autonomy" from Mars, a 97-year-old firm still controlled by the Mars family. He pointed to Mars' stewardship of pet food-maker Royal Canin, which it bought several years ago and maintains as a separate entity.[35] Family legend has it that the Wrigley and Mars patriarchs used to attend baseball games together in the 1930s. "Its been 100 years of due diligence and we saw the opportunity," said Mars President Paul S. Michaels.[22]

Chewing gum is a popular habit, but it provides little noticeable benefit to most users.Wrigley has for years tried to push the varied benefits its sees in the habit its namesake helped make popular 100 years ago. Much of its "independent" research is from something called The Wrigley Science Institute, an organization it calls the first "of its kind committed to advancing and sharing scientific research that explores the benefits of chewing gum."[25] "If you're limited to chewing gum, there's a limit to your importance with retailers," said Robert Moskow, a stock analyst with Credit Suisse. "Wrigley has always wanted to expand into the broader confectionary arena, and maybe they realize this is the best way to do that and keep their jobs."[35] While stress is a fact of life, managing "life's little stresses" may be as easy as chewing gum. In a 2006 study conducted on behalf of the Wrigley Science Institute, gum chewers were more calm and relaxed in dealing with life's everyday stresses when they chewed gum.[25] Wrigley's Orbit, Extra and Eclipse sugarfree chewing gums are the first and only chewing gums available to earn the American Dental Association's Seal of Acceptance and have been clinically proven to help fight cavities, strengthen teeth and reduce harmful plaque acids.[25]

• Who: Two of America's leading business families, uniting two of the best-known consumer brands, Wrigley gums and Mars candy bars.[41] Next time you feel stressed when you're sitting in traffic or waiting in line, try popping in a piece a gum. It may offer a relaxing antidote. The avails of its Life Savers candy product could not be found on Wrigley's site, but the name itself might imply some sort of fate-defying benefit.[25]

Mars was willing to pay a hefty premium, while also preserving the Wrigley name and the company's presence in Chicago, but Wrigley pressed for a better offer.[12] I just came in cold." After his return to Chicago, Mr. Wrigley briefed his company's board, and it gave the go-ahead to continue talks. He said he kept in mind his longtime mantra of respecting the past but doing what was right for the future.[12]

Executives said family-owned Mars first began eyeing Wrigley in January and approached the company with an unsolicited bid April 11.[38] Monday's announcement sent Wrigley's shares into overdrive, reaching an all-time high. "I think this is a bold move, but beyond that, I think this is the right move," said Wrigley Chief Executive Bill Perez.[33] "Bill dreamed of building a confectionary powerhouse," says Jim Burns, president of Syracuse (N.Y.) -based investment firm J.W. Burns & Co., which owns 125,000 Wrigley shares. For all his efforts, Wrigley, 45, hasn't been able to realize any of those ambitions. The Hershey board rejected his takeover offer.[40]

Shares of Hershey Co. (HSY) rose 4.3% to $36.24, and Cadbury Schweppes PLC (CSG) gained 2.9% to $46.11.[46] The £11bn acquisition of the world's best known gum brand sent shares in Cadbury Schweppes, the rapidly shrinking confectionery and carbonated drinks business, rocketing 15½p to 579p on expectation of further consolidation.[11] The company also would become the world's largest candy-maker, passing Cadbury Schweppes P.L.C.' s 10.1 percent share.[13] Trying to second guess the complex web of politics at Hershey, which is controlled by a charitable trust with strong links to the small Pennsylvania town of the same name, is an extremely tricky game. Another possibility is of course that Cadbury becomes a target itself, perhaps for a Nestlé or Kraft. The fact that Cadbury's share price rose yesterday suggests that some investors think this may be the most likely outcome. As he loads up his boxes for the move from Berkeley Square, Mr Stitzer has a lot to chew on.[47] Cadbury and Hershey are reported to have talked in the past, although the Hershey Trust, which controls 78 per cent of Hershey's voting shares, has said Pennsylvania law requires it to maintain control of Hershey.[4] Analyst Toon Van Beeck of IBISWorld says the two companies will command about 18 per cent of the local market. "Cadbury-Schweppes is the largest player within the confectionary manufacturing industry, holding a massive 45 per cent market share so this merger brings Mars somewhat closer to Cadbury but is dwarfed by their size," he said.[23]

"I look at it as two companies that see the opportuntity to create a true global confectionary powerhouse," said Morningstar analyst Mitchell Corwin. "Combined, they catapult Cadbury by a significant margin. They become No. 1 in chocolate and No. 1 in chewing gum with a strong international presence and growth in emerging markets."[32] If stress relief is one reason people like to chew gum, Todd Stitzer could have been forgiven for reaching for a pack of Trident yesterday morning. Not only is the Cadbury chief executive in the middle of swapping his swanky Mayfair office for a business park in Uxbridge, now two unexpected guests are also threatening the company's lucrative grip on the global gum market.[47]

We have signed an agreement to merge with Mars, Incorporated, a global, $22 billion private family-owned company.[51] The other side of the equation is equally harsh. Global investment banking fees dipped to $12.2 billion in the first quarter, their lowest level since 2003, says Banc of America Securities analyst Michael Hecht. That isn't to say anyone can get a loan.[29]

The third piece of the financing comes from Buffett's Berkshire, in the form of a $4.4 billion subordinated loan.[14] Berkshire Hathaway, based in Omaha, Nebraska, has about $40 billion to spend on acquisitions.[20] Berkshire Hathaway is also providing $4.4bn of sub-ordinated debt to Mars in order to fund the deal.[34] 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.[1] In addition to Berkshire Hathaway, investment banks Goldman Sachs Group Inc. and JPMorgan Chase & Co. also provided financing for the deal.[25]

The deal is fully underwritten by Berkshire, Goldman Sachs GS and JPMorgan Chase JPM and is not subject to financing conditions, the companies said.[2] Financing for the deal is being provided by Goldman Sachs and JPMorgan Chase in addition to Berkshire.[4]

J.P. Morgan's financing alone wouldn't have been enough to get the deal done: the participation of Mr. Buffett, who was invited into the deal by Goldman Sachs, was crucial.[29]

Buffett's other food holdings include a stake in Kraft Foods Inc. The deal could force Mars rival Hershey Co. and Britain's Cadbury Schweppes Plc into a deal of their own.[15] Wrigley tried to buy Hershey in 2002, but Pennsylvania residents and politicians opposed the deal and it did not proceed.[13] Among the early changes after the deal is complete, Wrigley would take over control of Mars' non-chocolate candy, including Starbust and Skittles.[33] Under terms of the deal, Chicago-based Wrigley (NYSE: WWY) would become a separate and private stand-alone subsidiary of McLean, Va. -based Mars.[16]

Berkshire will also become a minority shareholder in Wrigley, once it is combined with Mars.[30] At closing, Berkshire Hathaway will make a minority equity investment in the Wrigley subsidiary. It is hoped that the transaction will be closed within six to twelve months.[44] Buffett's Berkshire Hathaway is helping finance the transaction, Mars said yesterday in a statement.[38]

Class shares of Berkshire Hathaway added 1.3%, or $1585.02, to $128,460.01.[45]

Analysts polled by Thomson Financial expected a profit of 55 cents a share on revenue of $1.39 billion.[38] The mean estimates of analysts surveyed by Thomson Reuters were for earnings of 55 cents a share on revenue of $1.39 billion.[6]

Revenue climbed 16 percent to $1.45 billion from $1.25 billion last year. [32] Revenue advanced 16 percent to $1.45 billion, helped by the weaker dollar and sales in China and Russia.[20]

Mars, based in McLean, Va., was founded by the Mars family in 1911 and is still familyowned. Its chief executive is Paul Michaels, a nonfamily member, who took over after the retirements of John and Forrest Mars Jr. The purchase also would continue Berkshire's interest in sales outside the United States. Berkshire companies such as Coca-Cola have long been active in the world market, and next month Buffett is due to visit several European countries in what has been called a shopping trip for possible Berkshire investments. [21] Wrigley's CEO also suggested that the two companies have a number of appealing complementary qualities, which could lead to plenty of sales and distribution benefits.[30]

Consumer-product companies like Wrigley tend to have strong cash flow and stay relatively steady even in a recession.[46] "When you cling to beliefs of the past too much, you end up making the wrong choices," Mr. Wrigley said. He also felt that the regulatory pressures and disclosure requirements make publicly held companies less competitive, and that going private would relieve many of those pressures.[12] While Wrigley said it was not seeking a takeover, the price was likely too high to ignore, Edward Jones analyst Matt Arnold said.[15] Berkshire also committed to buy a 2.1-billion-dollar stake in Wrigley at a discount to the price being paid to Wrigley stockholders.[1] Besides providing financing of US$4.4-billion, Berkshire will buy a stake of more than 10% in Chicago-based Wrigley -- which will be run as an independent subsidiary of Mars --for US$2.1-billion once the acquisition closes within the next 12 months.[25]

The transaction will see Mars transfer its global non-chocolate confectionary sugar brands, such as Skittles and Starburst candies, to Wrigley. [6] Wrigley confirmed that as part of the transaction Mars' non-chocolate sugar brands, including Starburst and Skittles, will be added to Wrigley's confectionery portfolio.[44]

Mars' non-chocolate sugar brands -- including Starburst and Skittles -- would be added to Wrigley's confectionery portfolio, joining Lifesavers and Altoids.[16]

Wrigley's name will stay in the public's eye. "It creates a global confectionery powerhouse," said Mitch Corwin, who follows Wrigley at Morningstar.[36] Wrigley is very well positioned in the global markets. Their earnings have been steady and growing. They are the big kid on the block, with not much fear of anyone else competing with them. Remember, consistent earnings, stock dividends, and stock splits have earned this stock as a long time keeper.[3]

"A good time to buy a really great business is when you can do it," said Buffett, who is known for savvy investing. He said he understood Mars and Wrigley better than he did the balance sheets of most major banks.[13] The gum proved so popular, it was not long before it became Wrigley's main business.[23]

Status: world's second-largest candy maker (with Wrigley, it will top Cadbury as the largest).[19] After the buyout is completed in six to 12 months, Wrigley would become a subsidiary of McLean, Va. -based Mars, maker of M&Ms;, Snickers bars and other candy.[42]

"Wrigley has been feeling the heat" from Cadbury, says David Morris, research director for food and beverage at research firm Mintel in Chicago. William Wrigley was in no position to spurn the rich offer he got on Apr. 11, while sitting at the McLean (Va.) kitchen table of Paul Michaels, the CEO of privately held Mars. [40] By rolling out new products in new countries, Cadbury has been gnawing away at its rival Wrigley's hold on the market.[47] U.S. chocolate company Hershey (nyse: HSY - news - people ) had discussed the possibility of joining forces with Cadbury in 2007.[45] London-based Cadbury Schweppes (nyse: CSG - news - people ) added 2.6%, or $1.18, to $45.98 off the news.[45]

Buffett also said the U.S. economy is in recession and that the contraction will be deeper and last longer than most people expect. "This will not be short and shallow,'' Buffett told the financial news network. The U.S. economy will expand 1.3 percent this year, the weakest performance since 2001, according to the median estimate of analysts surveyed by Bloomberg.[18] For Mr Stitzer, the timing of the new challenge could not have been worse. He and Ken Hanna, his finance director, are battling to drive through a big programme of cost cuts, including the loss of thousands of jobs, while finally pulling off the demerger - after the planned sale was aborted by the credit crunch - of the group's U.S. soft-drinks arm. With the corporate raider Nelson Peltz hovering on the sidelines, there have been rumblings that if the duo fail to lift profit margins this year, their days at the helm may be numbered. They will now have to roll up their sleeves to fight against an emboldened, cash-rich competitor and also have to consider whether Cadbury needs to bulk up in return.[47] In the first year, CAPS' lowest-rated stocks dropped an average of 16.6%. Just two weeks ago, for instance, CAPS All-Star TMFShakespeare questioned Radio Shack's seemingly outdated business model : "There is no electronic good for sale at Radio Shack that you need to feel in your hand before purchasing, so why take the stroll out to the strip mall when there are dozens of online competitors with the same products available? The only exception may be the cell phones, and each carrier has their own kiosk (often in near proximity)." Not surprisingly, shares of the electronic retailer fell yesterday after posting a 9% first-quarter profit decline, as results were hurt by weak sales in its Sprint wireless business -- exactly as TMFShakespeare had warned.[3] The firm had a strong 2007, generating $932m in annual profit on sales of $5.4bn thanks to buoyant business in Europe and Asia.[28]

Gross profit margin rose to 53.1% from 47.3%. Bill Wrigley said, "The overall confectionary category remains strong despite the economic turbulence so far this year." [6] "There's no question that the financial markets are very challenging right now and coming up with the financing was a challenge," Mr Wrigley said.[24]

Ownership: publicly traded, with Wrigley family trusts owning about 12.5 percent.[19] Mars is offering 28 percent more than Chicago-based Wrigley's closing price on April 25.[20] The stock price soared $14.50, or 23.2 percent, to $76.95 in midday trading Monday after briefly rising to a 52-week high of $77.75.[32] The $2.34 billion purchase agreement will provide an almost 6% premium to the burger seller's closing price Wednesday. The coffee chain lowered its second-quarter and full-year results below analysts' expectations.[2] "There is not going to be any real change to the Australian consumer. Prices are expected to remain the same and prices are not likely to change as a result of this merger," he said. "Any price changes are likely to be due to the fact of increasing goods prices such as milk and sugar. "It is also even likely that packaging will remain the same. Mars wouldn't be spending $25 billion to throw out such a prominent brand and valuable brand such as Wrigleys."[23]

The purchase will be financed with $11 billion from Mars, $5.7 billion in senior debt sold to Goldman Sachs Group Inc. and $4.4 billion in subordinated debt bought by Berkshire, in addition to the equity investment.[18] Mars will provide $11 billion of funding for the transaction and Goldman will provide a $5.7 billion committed senior debt facility.[2]

While sweets and chocolates have struggled, the £10 billion global gum market has been growing at a brisk 8 per cent per year, driven by gum's appeal as an alternative to high-calorie snacks and cigarettes. [47] Mr. Buffett's Omaha, Neb., holding company is getting that stake at a discount to the US$80-a-share price shareholders in the gum company are getting.[25] It'''ll be uncomfortable for management and shareholders just now ''' particularly after HBoS'''s indignant reaction to the recent rumour-fuelled share price collapse ''' but better to make a cash call now than have to do it later. Rival banks who have dismissed the idea, such as Bradford & Bingley, may come to regret it.[50]

Mars is stumping up $80 a share, or $23bn in total, of which Mr Buffett will provide $4.4bn.[50] The fast-food giant sees earnings per share jump 31% on strong international sales.[2] The average weighted interest rate on the senior notes was 6.8 per cent. The market was able to get a clearer idea of what price DPSG shares are likely to trade when they debut in May after grey market trading in when-issued shares started on Wall Street today. The when-issued shares, generated by large investment banks, provide holders with an option to invest in DPSG before its shares officially begin trading on May 7.[31]

Cadbury and Hershey discussed a deal last year, The Wall Street Journal reported, but talks fell apart. [46] Hershey and Cadbury Schweppes have held talks for years but have not reached an agreement. They might feel pressure to do so given the scale and scope of a Mars-Wrigley combination, which would bring together a big stable of brands with worldwide distribution.[38]

If the deal is completed, the combined companies would unseat Britain's Cadbury Schweppes as the world's largest confection maker.[32] The Federal Trade Commission is expected to review the deal but is unlikely to challenge it on antitrust grounds, lawyers said. While both companies are market leaders in the candy business, investigators are likely to focus on the companies' individual product lines, which are largely complementary.[12] Mars, which is closely held, was pledging equity, so the lenders were higher up in the capital structure. Mars isn't going to walk away from such a strategic deal the way private-equity firms have recently. "This is exactly the kind of business banks are pursuing now. If you can't lend to a company like this, you're closed for business," said Chris Donnelly, an analyst with Standard & Poor's Leveraged Commentary & Data, an affiliate of the debt-ratings provider.[29] Mars, which is a private company, said the deal would create the "best" as well as the biggest confectionery business in the world.[28]

The combined company would have " a strong foundation" of established brands in six core growth categories: chocolate, non-chocolate confectionery, gum, food, drinks and petcare.[44] "You have the top chocolate company in the world combining with the top chewing gum company. It's very complementary."[36] Who is there to stop it? Hershey? No, bad timing and chewing gum is not sufficiently core to persuade the Trust to change the habits of a lifetime and risk that sum of money. Cadbury? They wish, but anti-trust authorities would step in. Nestle? They don't need chewing gum and they have other priorities in that area (ie. chocolate). They don't do bidding wars and they don't do hostile takeovers.[9]

Hershey rose 4.6 percent in New York trading, while Cadbury climbed 2.8 percent in London as analysts including Eric Katzman from Deutsche Bank Securities Inc. suggested other mergers may occur.[20] Andrew Wood, an analyst with Sanford C. Bernstein in New York, said: "We would expect the synergies from the deal to be big as there is significant geographical overlap (which will allow numerous cost saving opportunities) but very little product overlap that would cause antitrust issues."[31] Andrew Wood, analyst at Sanford Bernstein, said in a research note ahead of yesterday's formal announcement of the deal: "The combined entity would have significant scale and breadth in a very attractive segment of the global food industry."[4]

Mars "intends for us to run as a separate, stand-alone entity with a high degree of autonomy,'' said Wrigley, who plans to remain executive chairman and said other executives including CEO William Perez will stay in place. [20] You just don't hear about them," Calkins said. "It's a little sad," said Rita Athas, executive director of World Business Chicago, a group Mayor Daley formed nine years ago to persuade companies to base their operations in Chicago.[36] When you do that, you'll naturally gravitate to simple (even boring) companies selling stable consumer products that pay out real cash and will likely be around "forever." In Buffett's own words, "I look for businesses in which I think I can predict what they're going to look like in 10 to 15 years' time.[3] Berkshire has stakes in companies including Coca-Cola Co. and Buffett ranks as the world's richest person, according to Forbes magazine.[20]

McLean, Virginia-based Mars is the eighth-largest private company in the U.S., Forbes magazine said in November. "Buffett gives it a lot of credibility so there's not a financing issue here, which is so important these days,'' Burnett said.[20] Analysts say U.S. Government approval should be forthcoming because the new massive company's products are diverse enough to quieten any concerns about monopoly power.[23]

The company gets about 45 percent of revenue from chocolates and other snacks. Its biggest division is pet food, which sells Whiskas cat food and Pedigree for dogs, and accounts for 46 percent of sales, according to the company's Web site. [20] Raible was one of many residents from across the city who overflowed the chambers at Monday's City Council meeting. The group was filled with teachers and business owners, mothers and fathers, all representing different economic and racial backgrounds.The one thing they had in common was a growing fear for their own well-being in a town that once felt safe. Numbers released last week by Charlotte-Mecklenburg police worsened their fears.In the first three months of 2008, compared with the same period last year, robberies increased by more than 15 percent, aggravated assaults jumped by almost 17 percent and home burglaries increased by almost 18 percent.Police Chief Darrel Stephens, who retires in June, said there are always variations in crime numbers, and that people should consider rates and long-term trends. The violent crime rate in Charlotte has generally declined for more than a decade, though the property crime rate has edged up in four of the past five years.Still, anxiety has grown after a recent rash of brazen property crimes and high-profile violence.In March, four people were found dead in an apartment at the Tree Top complex in southwest Charlotte, the city's worst multiple homicide since 1979.What has some people particularly on edge is that neighborhoods where crimes happened rarely -- if ever -- are now dealing with them.In December, Eric Sprouse, owner of Dilworth Billiards, was shot twice as he walked to his nearby home with a bag of money in his hand.In late February, a couple ran from two men who pulled on hoods and jumped out of a car as they walked home from an East Boulevard restaurant.And in March, a Dilworth couple were robbed at gunpoint only blocks from their house."[43]

We have mentioned a few times that buying the oil majors when oil was over $100 a barrel was probably a good idea. This morning, both BP and Royal Dutch Shell have beat City forecasts for the first quarter due mainly to ''' surprise, surprise ''' the record price of oil. [50] "Large deals are having a hard time getting done, and Mars is probably looking for certainty on the financing."[14] The company received a financing commitment from hedge-fund shareholder Pershing Square Capital Management.[46] The Hershey Trust, the company's controlling shareholder, has shown a reluctance to cede control of the company.[46]

A combined Mars-Wrigley entity would overtake Cadbury Schweppes as the world's biggest confectionery company. [31]

SOURCES

1. AFP: Mars to buy Wrigley to become gum-candy power
2. Mars Chews Up Wrigley, With Buffetts Aid | Food and Beverage | BRK.A CSG GS HSY JPM TR WWY - TheStreet.com
3. Monday's Biggest Stock Stars
4. Mars-Wrigley deal is gauntlet to Cadbury - Scotsman.com Business
5. The Associated Press: Mars, Buffet, cooperate in bid for Wrigley, newspapers say
6. 2nd UPDATE: Mars, Berkshire To Buy Wrigley For $23 Billion
7. Mars to pay $23B for Wrigley with help from Warren Buffett - Apr. 28, 2008
8. Buffett Confects One Sweet Deal - washingtonpost.com
9. US: Mars to buy Wrigley for US$23bn : Food News & Comment
10. Mars to Acquire Wrigley
11. Mars, Buffett and Wrigley start Cadbury's sugar rush | This is Money
12. Moneyweb - Wall Street Journal - Mars`s takeover of Wrigley creates global powerhouse
13. Mars, Buffett will buy Wrigley in a candy coup | Philadelphia Inquirer | 04/29/2008
14. Money man invests in what he 'understands' -- chicagotribune.com
15. Deal of the Day
16. Sweet deal: Mars and Wrigley to merge - Wichita Business Journal:
17. Bloomberg.com: Worldwide
18. Bloomberg.com: Worldwide
19. Buffett helps unite storied family firms :: CHICAGO SUN-TIMES :: Business
20. Bloomberg.com: Worldwide
21. SW Iowa News - Buffett looking at minority role in Wrigley deal
22. Mars buying gum maker Wrigley with financing from Buffett - International Herald Tribune
23. Mars chews up Wrigley in sweets merger - ABC News (Australian Broadcasting Corporation)
24. Warren Buffett's stake helps Mars take over Wrigley - Times Online
25. Mars likes the taste of Wrigley
26. AFP: Buffet, Mars look to buy Wrigley for 22 bln dlrs: report
27. Billionaires Indulge Their Sweet Tooth - Forbes.com
28. BBC NEWS | Business | Mars set to pocket Wrigley's gum
29. Moneyweb - Wall Street Journal - Buffett makes his selection
30. Wrigley Heads for Mars
31. Mars and Buffett bid $23bn for Wrigley - Times Online
32. The Associated Press: Mars buying gum maker Wrigley with financing from Buffett
33. The Associated Press: Mars buying gum maker Wrigley with financing from Buffett
34. Mars and Warren Buffett in Wrigley deal - Telegraph
35. Mars to buy Wrigley Co. -- chicagotribune.com
36. 'It's a little sad,' but sale won't hurt Chicago :: CHICAGO SUN-TIMES :: Metro & Tri-State
37. Wrigley's ratings on review for downgrade on agreed merger with Mars - Moody's - Forbes.com
38. Mars taking over Wrigley -- baltimoresun.com
39. Wrigley will give Mars something to chew on | theage.com.au
40. Wrigley: Grand Plans That Didn't Stick
41. Mars's Takeover of Wrigley Creates Global Powerhouse - WSJ.com
42. The Associated Press: Mars, Buffett, cooperate in $23 billion bid for Wrigley
43. Mars set to merge with Wrigley - Examiner.com
44. Mars-Wrigley merger creates world's largest confectionery player
45. Buffett Makes A Candy Match - Forbes.com
46. UPDATE: Wrigley Pact Shows Challenges Of Funding Giant Deals
47. Todd Stitzer left to chew over new flavour - Times Online
48. Mars Inc. Agrees To Acquire Wm. Wrigley Jr. In $23B Deal - MarketWatch
49. UPDATE - US: Candy industry to see more deals - Wrigley : Food News & Comment
50. Warren Buffett bags a bargain - Money Week
51. Free Preview - WSJ.com

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