Mars Inc, the maker of M&M chewing gum and Sticker chocolates, and billionaire investor Warren Buffett have acquired US chewing gum maker Wm Wrigly Jr Company in a $23 billion (£11 billion) deal, that could shake up the confectionery industry worldwide.

Mars, Incorporated, will acquire 100 per cent of Wrigley's outstanding shares and all of its outstanding options will be cashed out.  Mars will pay $80 cash for each share of Common Stock and Class B Common Stock of the Wrigley Company in a transaction valued at approximately $23 billion. Based on Wrigley's closing share price of $62.45 on April 25, 2008, and its three-month weighted average share price of $59.88, this price represents a premium of 28 per cent and 34 per cent, respectively. The terms of the transaction have been unanimously approved by the Wrigley Board of Directors.

This price also represents 4.3 times Wrigley's 2007 net sales and over 35 times Wrigley's 2007 earnings per share. Funding for the transaction includes approximately $11 billion from Mars, a $5.7 billion committed senior debt facility from Goldman, Sachs, and $4.4 billion of subordinated debt from Berkshire Hathaway, Inc. At closing, Berkshire Hathaway has committed to purchase a minority equity interest for $2.1 billion in the Wrigley Company subsidiary at a discount to the share price being paid to the stockholders of Wrigley.

"Those of you who know me, know that I have been a big fan of Wrigley's business model for many years, and I love their products," said Warren E. Buffett, chairman and CEO of Berkshire Hathaway. "When you think of a business that's easy to understand, with favorable long-term economics, and able and trustworthy management -- you think of Wrigley. Bringing together these iconic, world-class companies combines Wrigley's strengths with the deep resources and proven brand-building savvy of Mars and will result in a powerful force for innovation and growth in the global confectionery marketplace."

Buffett has also funded other iconic food and beverages companies like Coca-Cola and Sees Candies.

The acquisition creates a confectionery giant and could spur further mergers and acquisitions in the industry. Mars is the world's largest maker of chocolate by sales, commanding a market share of 15 per cent. Wrigley, which generates most of its sales outside the US and has expanded into chocolate and sweets, would bolster Mars's global reach. Controlled by the Mars family of northern Virginia, Mars is one of the last in the confectionery business and is one of the largest family controlled firms in the US.

The merger is will now expected to pressure Hershey and Cadbury Schweppes, which had abandoned a deal after years of talks, to revive their merger plans. The Hershey trust's stake in the company had been a major obstacle to a deal with Cadbury's. The deal had to be called off in 2002 amidst intense opposition from community groups and elected officials. Wrigley, which topped the US chewing gum market then, had also made a $12.5 billion bid for Hershey.

The combined entity will have a product portfolio containing some of the world's most recognizable and popular confectionery brands - including Orbit, Extra, Doublemint, M&M's, Snickers and Mars - as well as leading food, beverage and pet care brands, totaling over $27 billion in global sales.

After the acquisituion, Wrigley Company will operate as a separate, stand-alone subsidiary, and Bill Wrigley, Jr. will continue serving as the company's executive chairman. As part of the transaction, Mars' non-chocolate sugar brands - including Starburst and Skittles - will be added to Wrigley's confectionery portfolio, joining such well-known brands as Lifesavers and Altoids.

"First and foremost, this is a great transaction at a great price that provides tremendous value to Wrigley stockholders," noted Bill Wrigley, the current chairman of the Wrigley board. "Additionally, in terms of Wrigley's ongoing business, the true value of this transaction arises primarily from enhanced growth opportunities, including the potential for cross-pollination of people, ideas and brands, and significant enhancements of sales, marketing and distribution infrastructures. We see this as an historic opportunity to preserve what is special about the Wrigley Company in terms of values and culture, while continuing to grow and develop our associates, invest in our brands and drive long-term generational growth. So, from every perspective, I strongly support the transaction."

"Mars and Wrigley have much more in common than multi-generational family leadership and significant global footprints," commented Paul S. Michaels, Mars Global president. "We share common values and ways of doing business, including an emphasis on ethics and respect for people, focus on generational growth, and expertise in obtaining consumer insights and building enduring brands. This is not about being bigger - it's about being the best, and providing leadership and innovation across the full range of confectionery categories."

The Wrigley Company was founded in 1891 and Mars, Incorporated was established in 1911 and betweehn them  the combined enterprise will have over two centuries of experience in producing confectionery products,and building great brands and businesses around the world.

"This combination brings together two strong, complementary confectionery organizations," noted Bill Perez, president and CEO. "A big part of what attracted Mars to Wrigley was our proven track record in the marketplace and the talent of our people. As a stand-alone subsidiary of Mars, with our strong, global leadership team in place, we will have the opportunity to accelerate our already strong growth trajectory."

The proposed transaction is subject to customary closing conditions, including stockholder approval and certain governmental regulatory clearances. Both parties are committed to working to close the transaction as soon as possible, with the merger expected to be completed within six to twelve months.

For this transaction, Goldman, Sachs acted as the Wrigley Company's financial advisor and also as placement agent for the securities to Berkshire Hathaway; William Blair Incorporated acted as a financial advisor and provided an independent fairness opinion; and Skadden, Arps, Slate, Meagher & Flom, LLP served as legal advisor.