Mars Inc and Warren Buffett’s Berkshire Hathaway Inc may be close to buying Wm Wrigley Jr Co for more than US$22 billion in a deal that would combine two of the biggest US candy makers, the Wall Street Journal (WSJ) reported.
The purchase of the maker of Doublemint gum, with a market value last week of US$17.1 billion, may be announced as early as yesterday, the WSJ and the New York Times reported, citing unidentified people familiar with the matter.
Uniting closely held Mars, the New Jersey-based maker of Snickers and M&Ms, and the 117-year-old Wrigley would create a company that would compete with chocolate maker Hershey Co and Cadbury Schweppes PLC, the world’s largest candy maker. US candy firms are exploring combinations as competition intensifies and milk and sugar prices rise.
Wrigley’s sales may grow 9 percent this year, the slowest pace since 2000, according to the average estimate of nine analysts surveyed by Bloomberg. Competition from London-based Cadbury’s Trident and Dentyne gums in the US has eroded its market share.
In 2006, Chicago-based Wrigley named former Nike Inc chief executive William Perez president and CEO, the first person outside the Wrigley family to head the world’s biggest chewing-gum maker.
The trust that controls Hershey discussed ways to merge the chocolate company with Cadbury in a way that wouldn’t decrease the trust’s ownership, the WSJ reported last year.
Since November 2006, Mars’ share of the US chocolate market has increased 1.3 percentage points, while Hershey’s market share has fallen 2.3 percent points, Alexia Howard, a Sanford Bernstein analyst who recommends investors sell Hershey, wrote in an April 11 note to investors.
Voice and e-mailed messages sent by Bloomberg News to Berkshire spokeswoman Jackie Wilson and Mars spokeswoman Alice Nathanson weren’t immediately returned, nor was a call to Wrigley spokesman Christopher Perille.
“We do not comment on market speculation,” Jennifer Wu, corporate affairs director for Wrigley in Asia, said by telephone yesterday.
The terms of the purchase weren’t immediately clear, WSJ reported.
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