Wrigley-Mars Deal Creates Candy Titan
Mars, in a Warren Buffett-backed take-private deal, will pay $23 billion for the candy maker
April 28, 2008
The Wm. Wrigley Jr. Co. will merge with Mars Inc., in a $23 billion deal announced on Monday.
Mars agreed to pay $80 a share in cash for Wrigley, representing nearly 30% per share more than Wrigley shares had traded late last week. According to the terms of the deal, Mars will pay $11 billion. Goldman Sachs contributed $5.7 billion in committed senior debt and Berkshire Hathaway, of which Warren Buffett is chief executive officer and chairman, will provide $4.4 billion in subordinated debt. The deal has the potential to create the largest confectioner in the world, pushing the Wrigley-Mars combination past U.K.-based candy and beverage company Cadbury Schweppes.
Reports of the deal nevertheless sparked the possibility that Cadbury, which has for years considered joining with confectioner Hershey, might reignite talks.
While the $23 billion paid for Wrigley represents a significant premium over its market value, the structure of the deal — in which Mars was made to put up nearly half the transaction’s value in cash — also shows how the debt market has shifted to cause acquirers to back deals with more funds.
Bill Wrigley Jr., executive chairman and chairman of Wrigley’s board, called the deal a value for shareholders and a potential growth boon for each company, according to a statement released by the company.
Both companies’ boards have signed off on the deal, which is expected to close in six to 12 months.
Goldman Sachs, along with its debt provision, acted as the Wrigley’s financial advisor and placement agent for Berkshire Hathaway. William Blair served as a financial advisor and provided an independent fairness opinion. Skadden Arps acted as legal advisor for the deal.
“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 said.
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