By Lisa Kerner
Charlotte, N.C., April 28 - Mars, Inc. agreed to acquire Wm. Wrigley Jr. Co. in a $23 billion deal to take the company private.
Wrigley will become a separate, standalone subsidiary of Mars.
Both companies' boards of directors approved an agreement that gives Wrigley shareholders $80.00 per share of common stock and class B common stock, according to a Mars news release.
The per-share offer price is a 28% premium to Wrigley's closing price on April 25 and a 34% premium to its three-month weighted average share price of $59.88.
Mars noted that the offer price is 4.3 times Wrigley's 2007 net sales and over 35 times Wrigley's 2007 earnings per share.
The transaction is not subject to financing conditions and is expected to close within six to 12 months, Mars said.
Wrigley executive chairman and chairman of the board Bill Wrigley Jr. said he strongly supports the transaction. In a letter to Wrigley employees, he called the planned merger "a great transaction at a great price that provides tremendous value to Wrigley stockholders."
"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," Bill Wrigley said in the letter, which was included in a news release.
"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," he added.
Mars is committed to maintaining Wrigley's headquarters and operations in Chicago, according to Paul S. Michaels, global president of Mars.
"Mars and Wrigley have much more in common than multi-generational family leadership and significant global footprints," Michaels said in the Mars release.
"This is not about being bigger - it's about being the best, and providing leadership and innovation across the full range of confectionery categories," Michaels said.
Bill Wrigley will continue as the company's executive chairman, reporting to Michaels.
Mars' non-chocolate sugar brands, including Starburst and Skittles, will be added to Wrigley's confectionery portfolio that includes Lifesavers and Altoids.
Funding for the transaction includes approximately $11 billion from Mars, a $5.7 billion committed senior debt facility from Goldman Sachs and $4.4 billion of subordinated debt from Berkshire Hathaway, Inc., the companies said.
Berkshire Hathaway has committed to purchase a minority equity interest for $2.1 billion in the Wrigley subsidiary at a discount to the share price being paid to the Wrigley stockholders.
Warren Buffett, chairman and chief executive officer of Berkshire Hathaway, called himself a "big fan of Wrigley's business model" in the Wrigley release.
"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," Buffett stated.
Together, Mars and Wrigley will have a product portfolio of recognized and established brands in six core growth categories - chocolate, non-chocolate confectionery, gum, food, drinks and petcare - totaling some $27 billion in global sales, the companies said.
Goldman Sachs advised Wrigley and also acted as placement agent for the securities to Berkshire Hathaway, and William Blair Inc. provided an independent fairness opinion. Mars was advised by JPMorgan.
Wrigley is a manufacturer of gum and confections with $5.4 billion in global sales.
McLean, Va.-based Mars produces confections and other products. It operates three plants in Illinois, including a chocolate confectionery plant in Oak Park.
| Acquirer: | Mars, Inc.
|
| Target: | Wm. Wrigley Jr. Co.
|
| Announcement date: | April 28
|
| Transaction total: | $23 billion
|
| Price per share: | $80.00
|
| Expected closing: | Six to 12 months
|
| Stock price of target: | NYSE: WWY: $62.45 on April 25
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
