Mars Incorporated announced April 28 a merger agreement with Chicago-based Wm. Wrigley Jr. Company in a transaction valued at approximately $23 billion. Under the terms of the agreement, Wrigley will become a separate, stand-alone subsidiary of Mars. With $5.4 billion in sales, Wrigley is a world leader in gum and confections.
Under the terms of the agreement, unanimously approved by the boards of directors of both companies, shareholders of Wrigley will receive $80 in cash for each share of Common Stock and Class B Common Stock. Based on Wrigley's closing share price of $62.45 on April 25, and its three-month weighted average share price of $59.88, this represents a premium of 28.1 percent and 34 percent, respectively, to Wrigley stockholders. The transaction is fully underwritten and not subject to financing conditions.
Financing for the transaction will be provided by Berkshire Hathaway, Goldman Sachs and JPMorgan. At closing, Berkshire Hathaway will make a minority equity investment in the Wrigley subsidiary.
The combined company would have a strong foundation of established brands in six core growth categories – chocolate, non-chocolate confectionery, gum, food, drinks and pet care – including M&M's, Snickers, Dove, Mars, Orbit, Extra, Doublemint, Uncle Ben’s, Pedigree, Whiskas, Royal Canin and Banfield. The transaction builds the Mars business by strengthening and diversifying its confectionery business, and enhancing its potential for growth in the chocolate, non-chocolate confectionery and gum categories.
"When this transaction is completed, we will be proud to welcome Wrigley's associates to our company," said Paul S. Michaels, global president of Mars Incorporated. "The strong cultural heritage of two legendary American companies with a shared commitment to innovation, quality and best-in-class global brands provides a great basis for this combination. We are looking forward to continuing on our path of growth by jointly developing those values even further."
The combination will allow Wrigley to retain its character and focus as a stand-alone business while being part of a larger family corporation that has a strong heritage and an entrepreneurial and global culture.
Michaels added, "We understand how important Wrigley's presence has been for Chicago over the past century and have committed to maintain its headquarters and operations in the city. Mars has a long history of involvement in the greater Chicago economy and community, and we look forward to strengthening these ties by maintaining Wrigley's heritage there."
Wrigley was founded in Chicago in 1891 and Mars currently operates three plants in Illinois, including a chocolate confectionery plant in Oak Park which celebrated its 75th anniversary in 2004.
To provide more focus to Mars' brands and drive growth, the company will be transferring its global non-chocolate confectionery sugar brands, including Starburst and Skittles, to Wrigley. Following completion of the transaction, Bill Wrigley Jr. will remain executive chairman of Wrigley, reporting to Michaels. He will work closely with Bill Perez, president and chief executive officer, and the current Wrigley management team, which has a strong track record of delivering consistently superior performance.
The proposed transaction is subject to customary closing conditions, including approval by Wrigley stockholders and certain governmental and agency regulatory clearances. Both parties hope to close the transaction within six to 12 months.
About Mars Incorporated
Mars is a family-owned company that produces some of the world's leading confectionery, food and pet care products and has growing beverage and health & nutrition businesses. Headquartered in McLean, Va., Mars operates in more than 66 countries and employs more than 48,000 associates worldwide. The company's global sales are $22 billion annually. Founded in 1911, the company manufactures and markets a variety of products under many of the world's most recognizable trademarks, including Dove, Milky Way, M&M's, Snickers, Mars, Uncle Ben’s Rice, Royal Canin and Pedigree and Whiskas petcare products.
About the Wrigley Company
The Wm. Wrigley Jr. Company is a recognized leader in confections with a wide range of product offerings including gum, mints, hard and chewy candies, lollipops, and chocolate. The company has global sales of $5.4 billion and distributes its world-famous brands in more than 180 countries. Three of these brands – Wrigley's Spearmint, Juicy Fruit and Altoids – have heritages stretching back more than a century. Other well-loved brands include Doublemint, Life Savers, Big Red, Boomer, Pim Pom, Winterfresh, Extra, Freedent, Hubba Bubba, Orbit, Excel, Creme Savers, Eclipse, Airwaves, Solano, Sugus, P.K., Cool Air and 5.