Cadbury left in the dust behind Mars

With financing from Warren Buffett, candy maker Mars Inc. is buying confectioner Wm. Wrigley Jr. Co. for an estimated US$23 billion in cash. The deal would marry brands from Mars such as Snickers and M&Ms, with Wrigley's gum brands include Juicy Fruit, Orbit, Extra and Big Red.

The transaction will create a business generating US$27 billion in annual sales. Wrigley will remain a stand-alone business headquartered in Chicago, IL (US) and Mars will transfer its non-chocolate confectionery brands, including Starburst and Skittles, to the gum giant's portfolio.

Mars' takeover of gum giant Wrigley will create a new number one in confectionery. According to data from Euromonitor, the enlarged company would account for 14.4% of worldwide confectionery sales, surpassing Cadbury with 10.1%. Wrigley, which had been facing growing competition from Cadbury in the US and the UK will benefit from teaming up with Mars.

Both sides seemed keen to have done a deal, as talks only started three weeks ago. Mars paid US$80-a-share deal - 28% above the price at which Wrigley's share price closed last week. Billionaire investor Warren has put up US$4.4 billion to help fund the purchase, through his investment vehicle Berkshire Hathaway.

Mars' commitment to keep Wrigley's base in Chicago no doubt made the deal more palatable for a Wrigley family that has been linked with the company since it started selling gum in 1891.