September 16, 2023, Hershey’s logo in Manhattan.
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cookie and snack giant Mondelez made a preliminary acquisition approach to hersheyThe combination will create one of the world’s largest food and beverage businesses, according to people familiar with the matter.
The traditional chocolate maker’s stock price soared more than 10% on the news. Mondelez made a takeover offer to Hershey in 2016, but the company rejected the offer.
Hershey has hired an adviser to respond to the interest, one of the people said. The person said Mondelez made the approach shortly after Hershey reported third-quarter results that fell short of analysts’ expectations last month.
Hershey declined to comment on “market rumors and speculation.” Mondelez and the Hershey Trust, which controls about 80% of the chocolate maker’s voting stock, did not respond to requests for comment. Bloomberg first reported Mondelez’s approach.
Hershey’s stock has increased more than 4% since the beginning of the year, increasing its market capitalization to $39.19 billion. Ahead of Monday’s move, the stock had fallen 6% since the start of the year, echoed by concerns about increased use of GLP-1 drugs and soaring cocoa prices.
Mondelez shares fell more than 2% on Monday. The company’s stock price has fallen 15% this year, reducing its market capitalization to $82.16 billion.
Hershey stock is on track for its best pace since June 30, 2016, when the stock rose more than 16% after the company announced a $23 billion bid from Mondelez, which owns Oreo, Cadbury and Honey Maid. There is. Hershey’s board of directors unanimously rejected the offer, and Mondelez announced in August of the same year that it was abandoning its pursuit of the deal.
Since its founding in 1894 by Milton Hershey, the company has remained independent despite acquisition attempts and a strategic review by its board of directors in 2007.
Due to Hershey’s dual class structure, holders of Class B common stock, which are majority owned by the Hershey Trust, receive 10 votes per share. As a result, Hershey Trust has “substantial control” over the company’s future, according to a research note published Wednesday by JPMorgan analyst Ken Goldman.
Pennsylvania law also gives the state’s attorney general the power to arbitrate any transaction that takes away authority from a trust.
It happened in 2002 after the Hershey Trust announced plans to sell a controlling interest in the company to Wrigley. Following public criticism, the attorney general intervened to block the sale through the Dauphin County Orphans Court, which resolves legal issues related to charitable trusts, and 10 of the trust’s 17 directors resigned.
Consumer packaged goods companies are looking for deals to boost sales as years of high prices squeeze demand for existing brands. For example, Mars, the owner of M&M’s, bought Keranova, the maker of Pringles, for $36 billion this summer.
