A better trade made through purchase: Mars purchases Wrigley
What could be sweeter than having a candy company and chewing gum company
under the same umbrella? Not much, according to those who helped negotiate
the $23 billion buyout that gave Mars control of the William Wrigley Company.
It was a better trade for anyone who has ever made a visit to a concession
stand or convenience store.
The deal was aided by financier Warren Buffett, who put more than $2 billion
of the Berkshire Hathaway money into the deal. (Buffett joked that Mars passed
a personal 70-year taste test that he had conducted.) This better trade made
Wrigley a separate, stand-alone subsidiary of Mars. Wrigley shareholders
received $80 in cash for each share of stock, a premium of 28.1 percent. The
deal was approved by board of directors from both companies. Goldman Sachs
and JPMorgan Chase also provided some of the financing.
"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," Paul S. Michaels, global
president of Mars, said in a statement. "We are looking forward to continuing
on our path of growth by jointly developing those values even further."
Wrigley is best known for its chewing gum, like Extra, Orbit and Eclipse, but
also makes and distributes LifeSavers and Altoids. The Mars candy line
includes famous sweet treats like M&Ms, Snickers, Starburst, Skittles and
Twix. Mars also makes Uncle Ben's rice products and Pedigree pet food. The
merger is expected to generate sales in excess of $27 billion, which would
make the company the world's top confectioner, knocking Cadbury to No. 2.
Mars is headquartered in McLean, Virginia, and owned by the Mars family. It is
one of the largest privately owned companies in the country. Mars had more
than $21 million in annual sales, largely because of its candy line. The
company was started in 1911 by Frank Mars, who learned how to hand dip candy
from his mother. The breakthrough was the Milky Way bar, which became a best
seller in 1923 and led to the development of the Mars Bar.
Because of its standing as a private company, Mars does not cooperate with
many organizations, but states its own standards are high and don't need
outside scrutiny. Mars has developed a reputation for developing top managers
and leaders. Mars has lately delved into additional products, such as coin
mechanisms used in vending machines, and currency validators. Mars has
undertaken additional branding changes lately; FourSquare was renamed Mars
Drinks, the pet food division was renamed Mars Petfoods, and Masterfoods was
renamed Mars Snacks.
Wrigley was founded in 1891 and originally sold soap and baking powder. A
year later the company began to offer chewing gum with each can of baking
powder. The gum soon became more popular than the baking soda, so the company
reshifted its focus. A member of the Wrigley family served as CEO of the
company until William Perez assumed the position in 2006. Wrigley Field was
named in honor of founder William Wrigley and the name has remained, even
while other similar athletic facilities have sold naming rights to
corporations.
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