CHICAGO -- Wm. Wrigley Jr. Co. said that its stockholders overwhelmingly approved the adoption of the merger agreement with Mars Inc. Following the successful vote, both parties intend to complete the merger on October 6. Under the terms of the agreement, announced in April, Wrigley will become a subsidiary of privately held Mars, adding a number of brands to its portfolio, including Starburst and Skittles, and remaining headquartered in Chicago.
The combined strengths of Mars and Wrigley will create a $27 billion food company and the world's leading confectioner. Wrigley's product offerings [image-nocss] includes gum, mints, hard and chewy candies, lollipops and chocolate. The company has global sales of $5.4 billion and distributes its brands in more than 180 countries. The brands include Wrigley's Spearmint, Juicy Fruit, Altoids, Doublemint, Life Savers, Big Red, Boomer, Pim Pom, Winterfresh, Extra, Freedent, Hubba Bubba, Orbit, Excel, Creme Savers, Eclipse, Airwaves, Solano, Sugus, P.K., Cool Air and 5.
Mars is a family owned company that produces some of the world's leading confectionery, food and petcare products and has growing beverage and health and nutrition businesses. Headquartered in McLean, Va., Mars operates in more than 66 countries. The company's global sales are $22 billion annually. It manufactures and markets a variety of products including Dove, Milky Way, M&M's, Snickers, Mars, Uncle Ben's Rice, Royal Canin, Pedigree and Whiskas.
Wrigley stockholders will receive $80 cash for each share of stock.
Current top management is expected to remain in place, added The Chicago Tribune.
The Wrigley-Mars deal is fueled by debt, said the report. In addition to Goldman's commitment, Buffett's Berkshire Hathaway is putting up $4.4 billion in subordinated debt. Plus, Mars' $11 billion cash contribution is itself funded by $11 billion in debt being placed by J.P. Morgan Chase & Co.
Analysts said they do not see troubles in completing placement of the debt. "The financial markets are in turmoil, but I don't think the funding for the deal is at risk," Jon Andersen, a stock analyst at William Blair & Co., told the newspaper.
Mars and Wrigley are both stable businesses with higher profits margins, and they generate plenty of cash flow, he said. This "is a deal that even makes sense in this environment."
In addition to providing debt funding, Berkshire Hathaway also ponied up $2.1 billion in cash, which reportedly could given it an ownership stake of up to 19% in the new Wrigley, said the report. Mars would own the rest.
Wrigley had not put itself up for sale when Mars came calling last spring, the report said, but the company figured it could better grow sales by teaming with Mars, and analysts said its shareholders got a great price.
The Mars-Wrigley deal has ignited a wave of speculation in recent months of further consolidation in the confectionary business, the Tribune said. The most recent, which popped up this week in Britain's Daily Telegraph, has Nestle angling to buy a stake in Hershey Co., the big U.S. chocolate candy maker. Cadbury, another big European-based candy player like Nestle, has also been fingered as a suitor for Hershey. Others have speculated that Cadbury would be a target for Kraft Foods, which has a significant chocolate business in Europe.
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