Lawyers at US gum maker Wrigley were today licking their wounds after the trust behind Hershey Foods pulled the plug on its takeover offer.
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Wrigley said it remains on the lookout for similar opportunities to expand beyond its core chewing and bubble gum portfolio. As the phoney war to buy Hershey heated up last week, all eyes had been on the mooted joint bid by Swiss giant Nestlé and UK confectionery and soft drinks group Cadbury-Schweppes.
Nevertheless, it was Wrigley that was actually poised to steal the booty, having come up with an offer of US$12.5bn and placatory pledges to retain the Hershey name and keep plants open (for more information, click here). The news has propelled the 110-year old gum company to the major league of “companies to watch” when major mergers are in the air.
Food industry analyst John McMillin told the Associated Press it was a bold move by 39-year-old CEO Bill Wrigley Jr., and indicates the company is ready to head in new directions outside gum. “For a company that never has put debt on its balance sheet to suddenly consider buying a US$12bn company is a little bit like watching a teetotaller drink a fifth of scotch,” McMillin said. “This would have left a confectionery powerhouse.”
Lamenting “a unique strategic fit”
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By GlobalDataBreaking a long-established habit of not speaking to the press, Wrigley said it was disappointed by the Hershey trust’s decision not to proceed with the sale of its stake, as the combination would have been a unique strategic fit.
“We were able to craft a thorough, thoughtful, fairly valued proposal that we believed created a win-win situation for all interested parties. While we find Tuesday night’s decision by the Board of the Hershey Trust to terminate the sale of its controlling interest in Hershey Foods disappointing, we must respect the decision of the Trust and move on,” the company said in a release.
Wrigley said it would continue to aggressively pursue opportunities, reinforcing its commitment to producing long-term growth and increased value through core business expansion, brand building, innovation and close-to-home diversification.
Wrigley Hershey, as the new company was to have been called, would have had a combined US$7bn plus in annual turnover. Significantly, the merger would have met fewer regulatory obstacles than a deal involving Nestlé or Cadbury, as Wrigley only makes gum.
Judging by the events of the last few days, this will not be the case for long.
