New York, Apr. 28 - Mars Inc. and Warren Buffett's Berkshire Hathaway Inc. were close to a pact to acquire Wm. Wrigley Jr. Co. for more than $22 billion, according to people familiar with the matter, in a deal that would remake the global confectionary landscape.
A deal would unite two icons of the U.S. candy business: Wrigley, maker of the eponymous chewing gum, and Mars, the closely held company behind Snickers chocolate bars and M&M's.
The transaction was expected to be announced as early as Monday, the people said. Both companies declined to comment.
Terms of the deal weren't immediately clear but Wrigley has a stock market value of about $17.1 billion and it appeared that the buyers were prepared to offer a rich premium.
Under one scenario under discussion, Berkshire would likely provide financing to Mars for the deal and also become a stakeholder in Wrigley, according to people close to the deal.
A deal would expand Mars's already considerable global reach. Wrigley generates the majority of its sales outside of the U.S. and in recent years it has expanded its offerings well beyond chewing gum. Mars is the world's largest maker of chocolate by sales, with a market share of 15%.
In 2005, Wrigley bought Kraft's candy assets, including Altoids and LifeSavers, for about $1.5 billion. Wrigley also recently purchased a Russian chocolate company. The family-controlled company was close to a deal to acquire Hershey Co. (HSY) in 2002 for about $12.5 billion but that deal fell apart at the last moment.
A weak dollar and strong foreign demand have boosted Wrigley's profit recently. But the company has struggled in the U.S., where it faces intense competition. Wrigley's products include Extra, Eclipse, and Orbit gums.
A sale would also end Wrigley's independence. The company was founded in the late 19th century by William Wrigley Jr. As a boy, he ran away from Philadelphia to New York, where he hawked newspapers and slept on the street, according to a 1920 article in American Magazine. Years later he went to Chicago to peddle soap, then baking powder, to shop owners. To entice them, he gave away two packages of chewing gum with each can of baking powder. When the gum became more popular, he started selling that instead.
Soon he was making his own gum. Juicy Fruit hit shelves in 1893. By 1920, he was making nine billion sticks of gum a year and had become the world's largest advertiser of a single product. In 1923, the company went public.
The Wrigley family helped build Chicago and remains one of its best-known dynasties. Wrigley's Michigan Avenue headquarters is one of the city's landmark buildings and the family's name is on everything from the Chicago Cubs baseball stadium to the Wrigleyville neighborhood to part of the new Millennium Park.