With its proposed $23 billion acquisition of Wrigley, McLean-based Mars Inc. is poised to double not just its refreshment, but its holdings in the confection arena.
Mars announced Monday that it planned to acquire the Chicago-based gum and food company with the aid of Warren Buffet, whose Berkshire Hathaway investment firm would be a minority investor in the deal.
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Representatives for the companies did not return calls for comment, but in a joint statement, Mars and Wrigley said the combined firm would have brands in six different areas: chocolate, other confectionery, gum, food, drinks and pet care.
Mars currently counts such brands as Dove, Milky Way and M&Ms among its assets, while Wrigley owns Doublemint, Juicy Fruit and Big Red, among others. Under the agreement, Wrigley would operate as a stand-alone subsidiary of Mars.
Mars reported $22 billion in sales during 2007, while Wrigley saw $5.4 billion in sales during the year.
“The deal makes good commercial sense,” said analyst Julian Lakin of Mirabaud Securities of London. “Wrigley has been diversifying its product range, getting into candy with Lifesavers and trying to merge with Hershey to get into chocolate.”
The deal could put pressure on competing Cadbury, he said, as the merger would give the combined company about a 15 percent market share, ahead of Cadbury’s 10 percent hold, Lakin said.
Under the deal, Mars’ non-chocolate candy brands, such as Starburst and Skittles, would go to Wrigley. The deal is subject to approval by regulatory authorities. In its statement, the companies projected it would take six to 12 months for the deal to close.
