Mondelez (MDLZ.US) Bid For Hershey (HSY.US) Falls Through As Major Shareholder Rejects Initial Offer
1min read US chocolate maker Hershey Co. rejected a preliminary acquisition offer from Mondelez International Inc., according to people familiar with the matter, which would have created a food giant with nearly $50bn in annual sales and one of the largest deals in packaged-food history.
Hershey Trust Co., which owns about 80 per cent of Hershey’s voting shares, turned down the offer, saying it was too low, the people said.
Mondelez had approached Hershey earlier this week, according to reports, and as of the weekend its market capitalisation was about $84bn, while Hershey’s was $35bn.
Hershey Trust has in the past used its voting power to block deals. In 2016, it blocked a $23bn takeover bid from Mondelez after Hershey rejected it.
Mondelez on Wednesday approved a $9bn share buyback and said it was committed to its capital allocation priorities, including reinvesting in brands and “a focused acquisition strategy to add complementary assets”. Hershey’s valuation, including debt, would be more than $40bn, according to data compiled by Bloomberg, a sizeable acquisition.
Adam Crisafulli of Vital Knowledge said the news “doused any potential Hershey deal”.
Hershey, founded in the late 19th century, is known for its chocolate and candy brands. In November, it acquired Sour Strips to expand its candy business.
Cocoa prices have fallen from their peak but remain much higher than in recent years, hitting Hershey, while sugar costs have also been high. Last month, Hershey cut its net sales growth and earnings expectations as inflation pressures consumers to watch their budgets. Steve Voskuil, Hershey’s chief financial officer, said cocoa would be the “biggest component” of its cost increases by 2025.
The packaged-food industry has been struggling with declining volumes, slowing growth and global consumer weakness. As shoppers start to resist price hikes and become more health-conscious, companies are looking for innovation and new markets to boost sales, a trend that could spark a wave of industry consolidation.
This month, Mars, the snack maker, agreed to buy Kellanova, the maker of Pringles, for nearly $36bn, a deal that was seen as the largest takeover in the global food industry in 2024.
As of Wednesday’s close, Hershey shares were down more than 5 per cent and Mondelez shares were up more than 2 per cent.
