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A MOUTHFUL: Mars makes Snickers bars, M&Ms and other candy. Wrigley produces such gums as Extra, Eclipse, and Orbit.
(Chris Hondros / Getty Images / April 5, 2008)
UPDATE: Mars Inc. said it is acquiring Wm. Wrigley Jr. Co. in a deal the companies value at nearly $23 billion.
NEW YORK—Mars Inc. and Warren Buffett's Berkshire Hathaway Inc. were close to a pact to acquire Wm. Wrigley Jr. Co. for more than $22 billion, according to people familiar with the
matter, in a deal that would remake the global confectionary landscape.
A deal would unite 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.
The transaction was expected to be announced as early as Monday, the people said. Both companies declined to comment.
Terms of the deal weren't immediately clear but Wrigley has a stock
market value of about $17.1 billion and it appeared that the buyers
were prepared to offer a rich premium.
Under one scenario under discussion, Berkshire would likely
provide financing to Mars for the deal and also become a stakeholder in
Wrigley, according to people close to the deal.
A deal would expand Mars's already considerable global reach.
Wrigley generates the majority of its sales outside of the U.S. and in
recent years it has expanded its offerings well beyond chewing gum.
Mars is the world's largest maker of dfchocolate by sales, with a
market share of 15%.
In 2005, Wrigley bought Kraft's candy assets, including Altoids and
LifeSavers, for about $1.5 billion. Wrigley also recently purchased a
Russian chocolate company. The family-controlled company was close to a
deal to acquire Hershey Co. in 2002 for about $12.5 billion but that
deal fell apart at the last moment.
A weak dollar and strong foreign demand have boosted Wrigley's
profit recently. But the company has struggled in the U.S., where it
faces intense competition. Wrigley's products include Extra, Eclipse,
and Orbit gums.
A sale would also end Wrigley's independence. The company was
founded in the late 19th century by William Wrigley Jr. As a boy, he
ran away from Philadelphia to New York, where he hawked newspapers and
slept on the street, according to a 1920 article in American Magazine.
Years later he went to Chicago to peddle soap, then baking powder, to
shop owners. To entice them, he gave away two packages of chewing gum
with each can of baking powder. When the gum became more popular, he
started selling that instead.
Soon he was making his own gum. Juicy Fruit hit shelves in 1893.
By 1920, he was making nine billion sticks of gum a year and had become
the world's largest advertiser of a single product. In 1923, the
company went public.
The Wrigley family helped build Chicago and remains one of its
best-known dynasties. Wrigley's Michigan Avenue headquarters is one of
the city's landmark buildings and the family's name is on everything
from the Chicago Cubs baseball stadium to the Wrigleyville neighborhood
to part of the new Millennium Park.