Mondelez International is said to be considering a possible acquisition of The Hershey Co., a manufacturer of chocolate and snacks.
According to Bloomberg, Mondelez has made an initial inquiry regarding a potential merger. As of the market close, Mondelez had a market capitalization of approximately $84 billion, while Hershey was valued at $35 billion.
Mondelez, with a valuation of $84 billion, is eager to partner with Hershey, which has a market capitalization of approximately $35 billion. However, the company previously known as Kraft faced significant backlash from Cadbury’s chocolate enthusiasts following its acquisition of the British brand. Mondelez International emerged as a spin-off from the US-based Kraft Foods, which purchased Cadbury in 2010.
Cadbury was founded in Britain in 1824 by John Cadbury. Since the takeover, there have been numerous complaints regarding changes to the brand’s beloved Crème Eggs recipe, the reduction in bar sizes, the introduction of unusual new recipes, and job cuts.
This isn’t Mondelez’s first effort to attract Hershey. In 2016, the company withdrew after its $23 billion offer was turned down.
However, with the packaged food sector experiencing slow growth and evolving consumer preferences, the pressure for consolidation has never been greater.
If successful, the acquisition would surpass this year’s largest transaction, Mars’ $36 billion acquisition of Kellanova, which owns brands like Pringles, Carrs, and Special K. However, the path to a takeover is challenging, as any agreement would require approval from the Hershey Trust, which controls 80 percent of the company’s voting rights.
Hershey’s shares have declined by 6 percent this year, as the company grapples with soaring cocoa and sugar prices. Following Bloomberg’s report, Hershey’s stock surged by 17 percent, while Mondelez’s shares fell by approximately 4 percent.
CEO Michele Buck recently revised the company’s sales forecast downward, citing the impact of cash-strapped consumers tightening their spending. Both Mondelez and Hershey have remained silent, offering no official comments regarding the speculation surrounding the deal.
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