Wrigley sale jolts Chicago
The city of Chicago is facing big changes for another of its icons as the world's No. 1 chewing gum maker, Wm. Wrigley Jr. Co., said Monday it has agreed to be gobbled up by M&M's candy maker Mars Inc.
In a city where some people are still smarting from the demise of the legendary Marshall Field's department store brand, now part of the Macy's chain, the pending $23 billion deal for Wrigley is another blow.
"Wrigley is legendary with two major architectural landmarks, Wrigley Field and the Wrigley Building," Russell Lewis, chief historian with the Chicago History Museum, said of the Cubs' baseball park and the company's headquarters on Michigan Avenue. Lewis said it would have a huge impact on the city, and added: "It's a shame when a local company that has as big a name as Wrigley is bought out."
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The deal also chips away at Chicago's claim that it is the chocolate and candy capital of the United States, after losing such nationally recognized brands Fannie May and Brach's.
"Chicago was a center for candy manufacturing for a long, long, long time and then you've had over the years this attrition," Lewis said. "Wrigley was one of the last holdouts."
Wrigley chairman Bill Wrigley Jr., whose family owns a large stake in the company, promised that its history, which dates back to 1891, will not fade. The company introduced its first two products, Juicy Fruit gum and Wrigley's Spearmint gum, more than 110 years ago.
"We will maintain our headquarters in Chicago and continue our civic and philanthropic activities in our communities and around the world," Wrigley told reporters at a news conference.
He said Wrigley would operate as a stand-alone unit and keep its name, and even possibly add jobs in Chicago when Mars shifts the Starburst and Skittles brands to Wrigley's portfolio. Mars is based in McLean, Va.
Wrigley said the company's charitable foundation would continue. It has awarded more than $30 million in grants to charitable organizations since its inception in 1987, according to the company's Web site.
The agreement weds two of the country's most venerable confections companies, which each have long histories of family involvement and long 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.
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.
Executives said Mars first approached the world's largest gum maker with their 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.
Wrigley shares shot up 23 percent Monday after the sale was announced, closing at $76.91.
Executives with Wrigley and Mars emphasized the family-run nature of both companies and how an entrepreneurial culture would remain after the deal.
"We understand how important Wrigley's presence has been for Chicago over the past century and have committed to maintain its headquarters and operations in the city," Mars global President Paul Michael said in a statement.
"Mars has a long history of involvement in the greater Chicago economy and community, and we look forward to strengthening these ties by maintaining Wrigley's heritage there," he said.
Whether the Cubs' home, Wrigley Field, will keep the family name is a great unknown. Tribune Co. is looking to sell the team and its home park. Asked if he would like to see Wrigley Field keep its name, Bill Wrigley said the family would have to wait to see, just like the rest of Chicago.