In a deal that creates a €15 billion confectionery behemoth – boasting iconic brands such as Juicy Fruit gum and Milky Way bars in its portfolio – Wrigley is set to become a subsidiary of privately held Mars.
“The Wrigley team is looking forward to completing the transaction and beginning the next, exciting chapter for the company and its brands," commented Bill Wrigley Jr, chairman of Wrigley, on the deal which is expected to close on 6 October.
Shareholders of the chewing gum firm "overwhelmingly approved the adoption of the merger agreement with Mars", clearing the way for the deal completion on 6 October, 2008.
The dynamics of the global confectionery market are set to change, driven by this latest merger that topples UK chocolate maker Cadbury from the number one global confectionery slot.
When the proposed deal was announced back in April, rumours kicked off that the next big confectionery deal would see Cadbury merging with US confectioner Hershey.
Consolidation deals in the global food sector are frequent in today's increasingly challenging global marketplace: implicit in the Cadbury rumour was the notion that a Hershey hook-up would help protect market share, build new business in both emerging and western markets, and bring financial gains through economies of scale.
But quashing this deal idea last week, an article in London's Daily Telegraph cited a fresh rumour sweeping through the City dealing rooms that suggested Swiss-based rival Nestlé, not Cadbury, is in talks with Hershey Foods about a possible deal that could either involve a merger or a stake sale.
The Telegraph reported that Hershey is working on selling a 25 per cent stake in itself to Nestle, with an option for Nestle to buy the remaining 75 per cent stake within the next two years.
Analysts, however, struck a cautious stance, noting that the Hershey Trust, that controls a majority of Hershey's shares, has repeatedly expressed its opposition to a sale of the company.
In 2007 market analysts Euromonitor pitched Cadbury with a 10.1 per cent slice of the global confectionery market that includes chocolate, gum and sweets, with Mars in second place at 8.9 per cent, Nestle with 7.7 per cent and both Wrigley and Hershey with 5.5 per cent.
Under terms of the Wrigley-Mars merger, Mars will acquire a controlling interest of 80.7 per cent in Wrigley.
Financing for the transaction – that sees Wrigley exist as a stand-alone subsidiary – will be provided by billionaire Warren Buffet’s Berkshire Hathaway firm, investment bank Goldman Sachs Group and JP Morgan Chase.
The combined firm will have a portfolio of established brands in six core growth categories: chocolate, non-chocolate confectionery, gum, food, drinks and petcare. Brands include M&Ms, Snickers, Mars, Orbit, Extra and Doublemint.
As part of the transaction Mars' non-chocolate sugar brands, including Starburst and Skittles, will be added to Wrigley's confectionery portfolio.
Meanwhile, Cadbury remains upbeat about its position on the worldwide gum market, asserting to be number one in 18 of the top 50 gum markets worldwide.
In June the UK firm, recently demerged from its drinks arm, upped the stakes in the gum war with the launch of Trident Sweet Kicks, a mint-flavoured gum with a chocolate-flavoured liquid centre.
Targeting women seeking a “moment of pleasure in a sugar-free, low-calorie gum”, Cadbury claims its new launch, with its focus on indulgence, breaks new ground for the gum category.
At the same time, Cadbury's latest launch will seek new opportunities to grab market share away from rival Wrigley.