This is a blockbuster deal in the candy world. Mars, the private candy company, is buying Wrigley (WWY) for $23 billion. Shareholders of WWY will get $80 a share in cash. That’s a nice 28% premium over Friday’s close. Mars is perhaps one of the last, very large privately held companies.
I’ve been a long-time fan of Wrigley and it’s one of the classic stocks on the market. It has a simple, easy-to-understand business. The company is well run, and the stock has a great long-term track record.
As I’ve said many times, investors often make a mistake with investing by looking for a stock that’s trying to invent the seventh dimension. You really don’t need to do that. One of the best ways to invest is to find a solid, stable stock that has churned out earnings year after year.
Twenty-five years ago, shares of WWY were going for about $1. That’s a nice 80-fold return in 25 years, and that doesn’t include a consistently rising dividend. Given Wrigley’s business, it’s probably no surprise that Berkshire Hathaway will be in the deal, providing financing for the purchase.
Andrew Ross Sorkin writes:
Mr. Buffett has a history with iconic food and beverage businesses. He was an early investor in Coca-Cola and is already a candy owner in Sees Candies.
Actually, Buffett didn’t buy Coke (KO) until 1988. I’m not sure if that qualifies as early; it was after the stock had risen a great deal.