Mars, Buffett will buy Wrigley in a candy coup

CHICAGO - Mars Inc., backed by billionaire Warren Buffett, said yesterday that it had agreed to buy Wm. Wrigley Jr. Co. for $23 billion in cash to create the world's biggest candy-maker.

Wrigley shares surged 23 percent in New York trading 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.

The shares gained $14.46, or 23.15 percent, to close at $76.91 on the New York Stock Exchange.

The combined company would have $27 billion in annual sales and 14 percent of the world's candy market.

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. The company also would become the world's largest candy-maker, passing Cadbury Schweppes P.L.C.'s 10.1 percent share.

Wrigley tried to buy Hershey in 2002, but Pennsylvania residents and politicians opposed the deal and it did not proceed.

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.

"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.

When the deal is completed, Wrigley will operate as a Mars subsidiary.

"I look at it as two companies that see the opportunity to create a true global confectionery powerhouse," Morningstar Inc. analyst Mitchell Corwin said. "They become No. 1 in chocolate and No. 1 in chewing gum, with a strong international presence and growth in emerging markets."

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.

However, 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.

Wrigley's headquarters will stay in Chicago, where the business has operated since it was founded by the Wrigley family in 1891.

The Chicago Cubs' historic ballpark - Wrigley Field - got its name while the team was owned by the Wrigley family, which sold the baseball franchise decades ago.