Mars, Berkshire To Buy Wrigley For $23 Billion Mars Inc. and Warren Buffett's Berkshire Hathaway Inc. agreed to acquire Wm. Wrigley Jr. Co. (WWY) for about $23 billion in a deal that will remake the global confectionary landscape.
Meanwhile, Wrigley reported an 18% jump in first-quarter net income on record quarterly sales.
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.
Under the agreement, Wrigley shareholders will receive $80 in cash for each share held, a 28% premium to Friday's price. Shares traded at $77.86 in recent premarket activity.
Berkshire, along with Goldman Sachs Group Inc. (GS) and JPMorgan Chase & Co. (JPM), will finance the deal. Mars is putting up $11 billion, with Goldman providing a $5.7 billion credit facility and Berkshire providing $4.4 billion of subordinated debt. At closing Berkshire will also buy a $2.1 billion stake in Wrigley at a discount to the price being paid Wrigley shareholders.
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."Wrigley's has always seemed like a Buffett type of company: great product, large moat, well-run, outshines the competition. Buffett isn't getting a huge stake out of the deal (looks like 10% or so), but even so I think this is a very smart move by Buffett and I'm curious to see if he has any plans to further increase Berkshire's stake or what role Berkshire will play at all. Guess we'll be finding out soon enough!
Tags:
acquisition, berkshire hathway, chocolate, gum, mars, wrigleys
Posted at: 07:46 AM | Add Comment
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