Wrigley's ratings may be cut on Mars deal

NEW YORK (Reuters) - Chicago-based Wm Wrigley Jr Co WWY.N may see its ratings cut due to its proposed merger with Mars Inc, whose partial debt financing may worsen the No 1 chewing gum maker's credit profile, two rating agencies said on Monday.

M&M's candy maker Mars Inc has teamed up with billionaire Warren Buffett to buy Wrigley for $23 billion, to create the world's largest confectionary company.

Funding for the transaction includes approximately $11 billion from Mars, a $5.7 billion committed senior debt facility from Goldman Sachs, and $4.4 billion of subordinated debt from Buffett's Berkshire Hathaway Inc (BRKa.N), Standard & Poor's said.

The deal, which will give Berkshire Hathaway a minority stake in Wrigley, is subject to regulatory approval and is expected to close within six to 12 months.

"Given the expected increase in debt associated with this transaction, we believe Wrigley's credit measures will weaken from currently strong levels," S&P said in a release.

Moody's Investors Service said it may downgrade Wrigley's ratings because the partially debt-financed transaction "will likely result in a weaker credit profile at Wrigley, as a subsidiary of Mars."

Wrigley has not disclosed its plans with respect to its existing debt securities or undrawn $600 million bank agreement, Moody's said.

Wrigley's had $1.2 billion of total debt outstanding at the end of March, according to S&P.

S&P said it may cut Wrigley's corporate rating of "A-plus," the fifth highest investment grade.

S&P said it will review the company's capital structure, operating plans and future financial policy with management before it makes a decision on ratings.

Moody's said it may cut Wrigley's "A1" senior unsecured debt rating, also the fifth highest investment grade.

(Reporting by Anastasija Johnson; Editing by Leslie Adler)