Mars, Buffett buying Wrigley for $23 bln

M&M's candy maker Mars Inc has teamed up with blnaire Warren Buffett to buy the No. 1 chewing gum manufacturer Wm Wrigley Jr Co for $23 bln, creating the world's largest confectionery company.
The deal, will give Buffett's Berkshire Hathaway Inc a stake of more than 10% in Wrigley, which will become a separate Mars subsidiary. Buffett's other food holdings include a stake in Kraft Foods Inc.

The deal could force Mars rival Hershey Co and Britain's Cadbury Schweppes Plc into a deal of their own as they will be faced by a competitor with a stronger geographic base and portfolio of products, analysts said. Cadbury and Hershey are reported to have held talks in the past.
Aside from Berkshire, financing for the Wrigley deal is being provided by Goldman Sachs Group and JPMorgan Chase & Co, Mars said in a press statement.

At $80 a share, the deal represents a 28% premium over Wrigley's closing stock price of $62.45 before the deal announced.
The combined companies would have a major presence in the global chocolate, gum and candy businesses.

The acquisition, an unusual move in the confectionery business for Mars, will help the company expand its business into places where Wrigley has been strong, including Eastern Europe, while Wrigley has been making efforts in recent years to expand outside its core chewing gum business, said Irina Kazanchuk, an analyst at Euromonitor International. While Wrigley is the No. 1 gum maker in the world, it has faced increasing competition from Cadbury's gum business, which includes Dentyne and Trident.

Berkshire Hathaway, meanwhile, gets a stake that can help it expand its overseas exposure. Asked if Buffett's funding was needed to make up a shortfall in the financing of the deal, Bill Wrigley said, “There's no question that financial markets are very challenging right now, and coming up with the capital basically to make this deal was a challenge”.
Bringing Buffett in was a perfect choice for Mars, a private company, said Kenneth Harris, principal at consulting firm Cannondale Associates.