Mondelez made a takeover approach for Hershey

Cookie and Snack Giant Mondelez Makes Preliminary Takeover Approach for Hershey

The logo of Hershey’s in Manhattan on Sept. 16, 2023.

Michael Kappeler | Picture Alliance | Getty Images

Cookie and snack giant Mondelez has made a preliminary takeover approach for Hershey, according to people familiar with the matter, a combination that would create one of the largest food and beverage businesses in the world.

Shares of Hershey Soar

Shares of the legacy chocolate maker shot up more than 10% on the news. Mondelez made a previous takeover bid for Hershey in 2016, which the company rebuffed.

Hershey Hires Advisors

Hershey hired advisors to help it respond to the interest, said one of the people. Mondelez made the approach shortly after Hershey reported third-quarter earnings that missed analyst expectations last month, said the person.

Hershey’s Response

Hershey declined to comment on "market rumors and speculation." Mondelez and the Hershey Trust, which controls roughly 80% of the chocolate maker’s voting stock, did not immediately respond to requests for comment. Bloomberg first reported Mondelez’s approach.

Market Reaction

Hershey’s stock has risen more than 4% this year, raising its market cap to $39.19 billion. Prior to Monday’s move, shares had fallen 6% this year, hurt by concerns about the growing usage of GLP-1 drugs and soaring cocoa prices.

Mondelez’s Stock

Share of Mondelez fell more than 2% on Monday. The company’s stock has dropped 15% this year, dragging its market cap down to $82.16 billion.

History of Takeover Attempts

Hershey shares are on pace for their best day since June 30, 2016, when the stock climbed more than 16% after the company publicly disclosed a $23 billion bid from Mondelez, which owns Oreo, Cadbury and Honey Maid. Hershey’s board unanimously rejected the offer, and Mondelez announced in August of that year that it was giving up on its pursuit of a deal.

Hershey’s Independence

Since its founding in 1894 by Milton Hershey, the company has remained independent, despite takeover attempts and even a strategic review in 2007 by its board.

Dual-Class Structure

Hershey’s dual-class structure gives holders of its Class B common stock, largely held by the Hershey Trust, 10 votes for every share. As a result, the Hershey Trust has "substantial control" over the company’s future, according to a research note from J.P. Morgan analyst Ken Goldman published Wednesday.

Pennsylvania Law

Pennsylvania law also gives the state’s attorney general the power to intercede on any deal that takes power away from the trust.

Conclusion

The potential takeover of Hershey by Mondelez would create one of the largest food and beverage businesses in the world. However, Hershey’s dual-class structure and Pennsylvania law may make it difficult for Mondelez to acquire the company.

FAQs

Q: What is the current market value of Hershey’s stock?
A: The current market value of Hershey’s stock is $39.19 billion.

Q: What is the current market value of Mondelez’s stock?
A: The current market value of Mondelez’s stock is $82.16 billion.

Q: Has Mondelez made a previous takeover bid for Hershey?
A: Yes, Mondelez made a previous takeover bid for Hershey in 2016, which was rejected by the company.

Q: What is the significance of Hershey’s dual-class structure?
A: Hershey’s dual-class structure gives holders of its Class B common stock, largely held by the Hershey Trust, 10 votes for every share, giving the trust "substantial control" over the company’s future.