CHICAGO — The Oracle of Omaha is betting that the country's candy jar is recession-proof.
With financing from Warren Buffett, candymaker Mars Inc. on Monday said it is buying confectioner Wm. Wrigley Jr. Co. for an estimated $23-billion in cash. The deal would marry brands sweet-toothed Americans have munched on for decades: Mars owns Snickers and M&Ms; Wrigley's gum brands include Juicy Fruit, Orbit, Extra and Big Red.
"A good time to buy a really great business is when you can do it," Warren Buffett said on CNBC on Monday.
Buffett's Berkshire Hathaway Inc. will purchase a $2.1-billion minority equity interest in the Wrigley subsidiary once the deal is complete. The Omaha, Neb., company also offered $4.4-billion of subordinated debt to fund the deal.
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 already fueling speculation that the buyout could spawn a round of candy industry consolidation.
"I look at it as two companies that see the opportunity to create a true global confectionary powerhouse," said Morningstar analyst Mitchell Corwin.
Under the agreement, shareholders at Chicago-based Wrigley would receive $80 in cash for each share. Mars will also assume less than $1-billion of Wrigley debt.
Monday's announcement sent Wrigley's shares into overdrive, reaching an all-time high. Wrigley shares rose $14.46, or 23.2 percent, to close at $76.91.
"I think this is a bold move, but beyond that, I think this is the right move," said Wrigley chief executive Bill Perez.
After the buyout is completed in six to 12 months, Wrigley would become a subsidiary of Mars of McLean, Va. Its headquarters will stay in Chicago, where the business has operated since it was founded by the Wrigley family in 1891. The Wrigley family will no longer hold any equity in the company.