Wrigley to be merged into Mars in US$23 billion confectionery deal – 29/04/08

US. Wm Wrigley Jr Company is to merge with Mars Incorporated, one of the world’s leading confectionery and consumer goods companies, in a US$23 billion deal.

Mars has agreed to pay US$80 cash for each share of Common Stock and Class B Common Stock of the Wrigley Company. As a result of the transaction, Wrigley will become a private enterprise and part of one of the world’s premier family-owned companies.

The combined organisation will have a product portfolio containing some of the strongest confectionery brands – including Orbit, Extra, Doublemint, M&M’s, Snickers and Mars – as well as leading food, beverage and pet care brands, totalling over US$27 billion in global sales.

The terms of the transaction have been unanimously approved by the Wrigley Board. The deal is subject to customary closing conditions, including stockholder approval and certain governmental regulatory clearances.

The star-studded, gum-dominated Wrigley portfolio will complement the powerful Mars chocolate and sugar confectionery line-up

Funding for the transaction includes approximately US$11 billion from Mars, a US$5.7 billion committed senior debt facility from Goldman Sachs, and US$4.4 billion of subordinated debt from Berkshire Hathaway Inc. The latter has committed to purchase a minority equity interest for US$2.1 billion in the Wrigley Company subsidiary at a discount to the share price being paid to the stockholders of Wrigley.

Based on Wrigley’s closing share price of US$62.45 on April 25 2008, and its three-month weighted average share price of $59.88, this price represents a premium of 28% and 34%, respectively, to the Company’s stockholders. The price represents 4.3 times Wrigley’s 2007 net sales and over 35 times Wrigley’s 2007 earnings per share.

Mars Incorporated will acquire 100% of Wrigley’s outstanding shares and all of its outstanding options will be cashed out.

The Wrigley Company will operate as a separate, stand-alone subsidiary, keeping its headquarters in Chicago and continuing its civic and philanthropic involvement, both locally and in its communities around the world.

“First and foremost, this is a great transaction at a great price that provides tremendous value to Wrigley stockholders,” noted Bill Wrigley Jnr, Executive Chairman and Chairman of the Board (who will continue serving as the company’s Executive Chairman).

“Additionally, 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.

“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. So, from every perspective, I strongly support the transaction.”

“Mars and Wrigley have much more in common than multi-generational family leadership and significant global footprints,” commented Paul S. Michaels, Mars Global President. “We share common values and ways of doing business, including an emphasis on ethics and respect for people, focus on generational growth, and expertise in obtaining consumer insights and building enduring brands.

“This is not about being bigger – it’s about being the best, and providing leadership and innovation across the full range of confectionery categories.”

“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 Buffett, Chairman and Chief Executive Officer of Berkshire Hathaway.

“When you think of a business that’s easy to understand, with favourable 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.”

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