Mars has teamed up with billionaire Warren Buffett to buy Wm Wrigley, the world's largest chewing gum maker, for $23 billion (€14.7 billion), creating the world's largest confectionary company.
The deal, announced today, will give Buffett's Berkshire Hathaway a minority stake in Wrigley, which will become a separate Mars subsidiary. Buffett's other food holdings include a stake in Kraft Foods.
Aside from Berkshire, financing for the deal is also being provided by Goldman Sachs and JPMorgan, Mars said in a news release. At $80 a share, the deal represents a 28 per cent premium over Wrigley's closing stock price of $62.45 on Friday.
"The combined entity would have significant scale and breadth in a very attractive segment of the global food industry," Andrew Wood, analyst at Sanford Bernstein, said in a research note ahead of the formal announcement of the deal.
The combined companies would have a major presence in chocolate, gum and sugary sweets.
While Wrigley is a chewing gum giant, it has faced increasing competition from Cadbury Schweppes Plc's chewing gum business, which includes the Dentyne and Trident brands.
The Mars-Wrigley deal could force Mars rival Hershey Co and Cadbury into a deal of their own. The two companies are reported to have talked in the past, though the Hershey Trust, which controls about 78 percent of Hershey's voting shares, has said
Pennsylvania law requires it to maintain control of Hershey.
Wrigley has brands such as Altoids, Extra and Eclipse, while privately held Mars is known for M&M's, Snickers, Starburst and Twix.
While publicly traded, the majority of Wrigley's shares are controlled by the Wrigley family, a Chicago presence whose name is on the Chicago Cubs baseball stadium and a well-known Michigan Avenue landmark building.