Mars Gets Rest of Wrigley, Forms Confectionery Unit -- WSJ
October 07 2016 - 3:02AM
Dow Jones News
By Joshua Jamerson
Mars Inc. will combine its chocolate operations with its Wrigley
subsidiary, as it buys the minority stake in the chewing gum unit
from Warren Buffett's Berkshire Hathaway.
Mars said it accelerated its plan to purchase Berkshire's
Wrigley holding but didn't disclose financial details. A spokesman
for Wrigley didn't immediately reply to a request for comment.
The move to combine its chocolate business with Wrigley will put
brands such as Snickers candy bars and Doublemint gum into one
operating segment. Other divisions at Mars, such as petcare and
beverages, will remain separate.
The two units will form an entity called Mars Wrigley
Confectionery and be led by Martin Radvan, current president of
Wrigley and a 30-year veteran of Mars.
Wall Street was surprised by the $23 billion deal that privately
held Mars, backed by Berkshire, struck to buy then-publicly-traded
Wrigley in 2008.
Berkshire contributed about $6.5 billion to the deal, including
$2.1 billion for dividend-paying preferred stock in Wrigley and
$4.4 billion in bonds. Mars bought back the bonds in 2013, netting
Berkshire a pretax investment gain of $680 million.
Mars had become eligible to purchase half of Berkshire's Wrigley
stake on Thursday, and Berkshire said in a recent filing that it
had expected those shares to be purchased. Now, however, Mars will
instead purchase the full stake held by Berkshire.
The original Wrigley deal was one of several lucrative
investments Mr. Buffett struck during the financial crisis, using
Berkshire's cash-rich position to lend money at high interest rates
at a time when credit markets were tight.
On Thursday, Mr. Buffett said "I have enjoyed all of Berkshire's
experiences with the Mars family and management and wish them the
very best. Both Mars and Berkshire have profited from our
investment, and that's the way it should be."
Mars chocolate and Wrigley are set to combine sometime next
year. Mars Wrigley Confectionery will be based out of Chicago. Mars
Inc. is based in McLean, Va.
--Nicole Friedman contributed to this article.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
October 07, 2016 02:47 ET (06:47 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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