Yesterday, Wrigley announced that it had signed an agreement to buy 80% of the shares of Russian premium chocolate maker A. Korkunov for $300 million. It is a strong brand in a very important market, explained Christopher Perrill, Wrigley's director of external relations: "This is a good strategic opportunity for us , an opportunity to strengthen our presence in Russia.” “[Korkunov and his team] have built the business so well that we don’t see any point in changing anything,” rejoices Wrigley CEO in Russia Maxim Grishakov, and the new owners plan to retain the management and brand positioning. Korkunov” and the distribution system. According to Perilla, the company is not considering other acquisitions in the Russian chocolate market.

The FAS told Vedomosti yesterday that they have not yet received any statements from Wrigley about purchasing A. Korkunov.

Andrey Korkunov confirmed to Vedomosti that he and Sergey Lyapuntsov agreed to sell 80% of the confectionery factory to Wrigley, but will remain a minority shareholder and chairman of the board of directors. The partners have not yet decided whether Lyapuntsov will remain a shareholder in the company, nor how to dispose of the $300 million they received. Korkunov says he has big plans to develop the Odintsovo factory together with Wrigley. “I won’t have time for other projects,” he adds. The remaining 20% of Korkunov’s shares, according to Grishakov, will be bought out no sooner than in two years. And their value will be assessed based on the company’s new indicators, Korkunov clarifies.

Analysts believe that the valuation of Korkunov at $375 million (3.7 times its annual turnover and 21 times its profit) is overstated. In 2004, Norway's Orkla bought the confectionery holding SladKo with consolidated revenue of $214 million for less than $115 million. “When there is nothing to buy, all that remains is to overpay,” says MDM Bank analyst Alexey Gogolev. Deutsche UFG analyst Alexey Krivoshapko believes that Wrigley is buying a quality asset that will provide a good synergistic effect – Korkunov candies can be sold through chewing gum distributors. There are no comparable companies on the market, notes a source familiar with the terms of the deal, so Korkunov was assessed using several generally accepted methods.

The deal will save Wrigley $55 million over 15 years through tax benefits, Perrill says: U.S. law allows taxable income to be reduced by the difference between an asset's book value and its market value (goodwill), a source familiar with the deal confirms.

Until 1999, Wrigley produced only chewing gum. Everything changed with the arrival of William Wrigley Jr. He made the company aggressive and one of the fastest growing in the consumer market. In seven years, Wrigley doubled Wrigley's sales and began experimenting with new products. He launched new flavors gum, began producing refreshing candies. In an interview with The Wall Street Journal in March 2006, Wrigley said he wouldn't rule out anything from chocolate to dog chewing gum. The company has long been interested in the chocolate market: In 2002, it tried to acquire Hershey Co. for $12.5 billion, but the deal fell through at the last minute. Wrigley then promised to aggressively seek opportunities to strengthen its position. Its first chocolate asset will be “A. Korkunov”.

Wrigley chewed “A. Korkunov”