Warren Buffett Helps Mars Buy Wrigley
Posted by Dave | Posted in Investing, Warren Buffett | Posted on 28-04-2008-05-2008
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Warren Buffett today announced that he played a role ($6.5 billion) in Mars Inc.’s $23 billion purchase of Wm. Wrigley Jr. Co. He spoke on CNBC’s Squawk Box this morning. Watch the video and read full transcripts here.
In addition to buying $4.4 billion of Mars’s subordinated debt, Omaha, Nebraska-based Berkshire will pay $2.1 billion for an interest in Wrigley at an unspecified discount to the price being paid to shareholders, according to a statement today by Chicago-based Wrigley. Wrigley will become a private, stand-alone company owned by Mars.
Those of who follow Buffett’s Q&A with college students know that Warren Buffett uses Wrigley as an example many times over. For example, when he says he sticks to what he knows best and business that are simple – “chewing gum is as far as I have gone”. About Wrigley’s “moat” – “You give me a billion dollars and tell me to go into the chewing gum business and try to make a real dent in Wrigley’s. I can’t do it.”
During the interview to the question “when is it a good time buy a good business?” – He says “Well, I think a good time to buy a really great business is when you can do it. Many, many years ago, as I remember, Herman Lay offered the Frito-Lay company to Coca-Cola. And he offered them the company first, as I understand it, and they decided for one reason or another they didn’t want to do it then. And of course Pepsico bought it and it’s the best thing they ever did. So if you get a chance to buy a wonderful business, then my advice is, grab it. As Yogi Berra would say, ‘When you come to a fork in the road, take it.’”
