Mars seals deal to buy Wrigley gum

Apr 29 2008 By Holly Williams

Chocolate giant Mars has confirmed a deal to buy Juicy Fruit and Extra chewing gum group Wrigley for around $23 billion (£11.6bn).

The offer, which is being part financed by billionaire US investor Warren Buffett, sees two of America’s largest confectionery groups come together to create a firm with £13.6bn in sales and more than 64,000 staff.

Wrigley will remain as a standalone business, but Mars said it would transfer its non-chocolate brands, such as Starburst and Skittles, over to Wrigley following the planned $80 dollar-a-share takeover.

The group pledged to retain Wrigley’s headquarters in Chicago and said Bill Wrigley will remain chairman of the chewing gum firm. Mars, which also makes Snickers and M&Ms, declined to comment on the impact on UK operations.

Both groups are based in the US, but have significant offices and manufacturing plants in the UK.

Paul Michaels, global president of Mars, said: "When this transaction is completed, we will be proud to welcome Wrigley’s associates to our company.

"The strong cultural heritage of two legendary American companies with a shared commitment to innovation, quality and best-in-class global brands provides a great basis for this combination."

Mr Wrigley said the deal presented an "historic opportunity" to combine people, ideas and brands, while also benefiting from an enlarged sales, marketing and distribution infrastructure.

"This is not about being bigger - it’s about being the best, and providing leadership and innovation across the full range of confectionery categories," he added.

It is thought a merger between Mars and Wrigley could spark off a wave of consolidation in the industry as confectionery firms seek to increase their size and global reach.

The deal between Mars and Wrigley will boost the capability of both firms, in particular giving Mars a bigger international presence.

Wrigley has been under pressure in recent months as rival Cadbury Schweppes has stepped up its assault on the chewing gum market, with a recent worldwide marketing blitz for its Trident brand.

Birmingham-based Cadbury claimed earlier this year that it was winning the chewing gum war after revealing that Trident was now a bigger brand than its famous Dairy Milk chocolate, seeing a 26% surge in sales last year.

Mars has tied up with Mr Buffett for the deal, with the US investor’s Berkshire Hathaway operation set to take on a minority stake in the Wrigley business after the acquisition, which is still to be approved by shareholders.

Mr Buffett already has interests in the confectionery sector with a stake in See’s Candies in the US and having been an early investor in Coca-Cola.

Wm Wrigley was founded 117 years ago, but now sells products in 180 countries, with strong business outside the US reportedly helping offset a tougher domestic market.

Wrigley’s has a strong history in the UK despite its American roots, first launching its Spearmint gum in the UK in 1911.

It built a UK factory in Wembley, north London, in 1927, later relocating the plant and its head office to Plymouth, where over 600 people are now employed.

Around 25% of chewing gum produced in Plymouth is exported overseas.

Mars is also headquartered in the US, but has a large operation in the UK, with manufacturing plants in locations including Slough in Berkshire, King’s Lynn in Norfolk and Basingstoke.