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Mars to pay $23 billion for Wrigley; gum maker's biggest plant is in Flowery Branch
Officials say deal will have little effect on Wrigley's 14,000 workers
Snickers and M&Ms candy maker Mars Inc. has offered a $23 billion buyout to Wm. Wrigley Jr. Co., which manufactures Juicy Fruit and Doublemint gums. Wrigley, which has its largest plant in Flowery Branch, accepted the offer Monday. - photo by DEMETRIUS FREEMAN

The Wm. Wrigley Jr. Co., which has the largest gum-making plant in the company’s worldwide empire in Flowery Branch, has accepted a $23 billion buyout offer from privately held Mars Inc.

William Wrigley Jr.’s family spent more than 115 years building the soap salesman’s fledging company into a massive corporation that made chewing gum a mass-market product.

But Monday, the Wrigley clan announced it is finally cashing out after four generations.

"It’s the end of ... equity ownership, but I think the legacy of the Wrigley family will survive and endure for some time to come," said Bill Wrigley Jr., the company’s executive chairman and the great-great-grandson of William Wrigley Jr.

"We must respect the past, but at all times do what’s right for the future," he said.

Under the agreement, Wrigley shareholders will receive $80 in cash for each share. McLean, Va.-based Mars will also assume a small amount of Wrigley debt.

Executives said family owned Mars, which makes Snickers and M&Ms, first approached the world’s largest gum maker with the unsolicited bid on April 11. Since then, the two sides have haggled to reach the $80-per-share offer — a 28 percent premium to Wrigley’s Friday closing price of $62.45.

The announcement stunned officials at the Greater Hall Chamber of Commerce.

"We did not know anything about the announcement, but these are two great companies," said Kit Dunlap, president of the chamber. "It’s like Delta and Northwest, they are two strong companies. Mars and Wrigley have two slightly different products, but they should fit well together."

Just two years ago, Wrigley announced a $48 million expansion of the Flowery Branch factory, creating 200 new jobs at the 35-year-old plant.

The expansion made the plant, which was the largest in the U.S. at the time, the largest of all Wrigley factories.

The plant, built on the site of a former walnut grove, began operating in December 1971 with 100 employees.

The 2006 expansion was part of a companywide production change resulting from the acquisition of a number of confectionery brands from Kraft Foods Global Inc.

The most significant change was the shifting of gum base production from the company’s L.A. Dreyfus subsidiary in Edison, N.J., to Flowery Branch.

The plant now produces gum base, the product that holds the gum together and makes it chewable, for use at Flowery Branch and for shipment to other Wrigley’s plants.

The agreement weds two of the country’s most venerable confections companies, which have long histories of family involvement and ties to each other. Mars, founded in 1911, is still owned by descendants of founder Frank Mars.

Family legend has it that the Wrigley and Mars patriarchs used to attend baseball games together in the 1930s.

"It’s been 100 years of due diligence and we saw the opportunity," said Mars President Paul S. Michaels.

Mars has eight manufacturing plants in the U.S., including a Georgia plant in Albany that produces Combos Snacks, Kudos, CocoaVia and Snickers.

The deal includes debt financing from Warren Buffett’s Berkshire Hathaway Inc., which will also purchase a $2.1 billion minority equity interest in the Wrigley subsidiary once the deal is done.

If the buyout receives regulatory and shareholder approval, the combined companies would leapfrog over Britain’s Cadbury Schweppes as the world’s largest confection maker — a move that’s already fueling speculation that the deal could spawn a round of candy industry consolidation.

The companies expect the buyout to close in six to 12 months.

"I look at it as two companies that see the opportunity to create a true global confectionery powerhouse," said Morningstar analyst Mitchell Corwin. "They become No. 1 in chocolate and No. 1 in chewing gum with a strong international presence and growth in emerging markets."

Wrigley, which has been publicly traded for 80 years, will keep its headquarters in Chicago, a city with which its name has been synonymous for decades.

The gum maker’s ornate towering headquarters along the Chicago River is a favorite among tourists for snapping pictures. And the Chicago Cubs historic ballpark — Wrigley Field — got its name while the team was owned by the Wrigley family, which sold the franchise decades ago.

"The Wrigley family certainly has been an important part of Chicago history for many years," said Tim Samuelson, a Chicago cultural historian. "And while it’s a shame to see one of the old companies go out of family ownership, I think the Wrigley presence will stay around for a long time by the legacy they left around."

Monday’s announcement sent Wrigley’s shares into overdrive, reaching an all-time high.

"I think this is a bold move, but beyond that, I think this is the right move," said Wrigley Chief Executive Bill Perez.

Executives said Wrigley would gain little benefit in weathering a run-up in commodities costs, but said the deal would allow the company to enhance its sales, marketing and distribution systems.

Among the early changes after the deal is complete, Wrigley would take over control of Mars’ non-chocolate candy, including Starburst and Skittles.

Wrigley said the impact on the company’s 14,000 employees would be minimal. Wrigley will remain executive chairman, and officials said the company’s executive team would likely stay in place.

Officials said Wrigley’s board, which unanimously approved the $80-per-share offer over the weekend, would examine any other offers submitted to the company.

But Citigroup analyst David Driscoll said he thought a competing offer would be unlikely.

"The only other likely buyer that we believe would benefit from acquiring Wrigley would be Hershey; but we view this as an unlikely outcome given the current situation," he told investors in a research note.

The Hershey Co. has struggled with flattening sales and rising commodity costs since late 2006 as it spends heavily to expand its overseas presence and cut back its work force in North America.

Meanwhile Monday, Wrigley said its first-quarter profit rose 18 percent, thanks to strong sales in Eastern Europe and Asia and a weakened U.S. dollar.

The company earned $168.6 million, or 61 cents per share during the January-through-March quarter. That’s up from $142.7 million, or 52 cents, last year. Revenue climbed 16 percent to $1.45 billion last year. Analysts polled by Thomson Financial expected a profit of 55 cents per share on revenue of $1.39 billion.

The Associated Press contributed to this report