Mondelez Said to Have Approached Hershey With Takeover Offerby and
Offer said to value Hershey at $107 a share in cash and stock
Transaction would create the world’s largest candy maker
The bid valued Hershey at $107 a share, half in cash and half in stock, the person said, asking not to be identified as the information is private. The two companies have been talking in recent months, but no deal has been reached, the person said.
Mondelez sent a letter to Hershey expressing interest this month, the Wall Street Journal reported earlier. Hershey, based in the Pennsylvania town of the same name, has a market value of about $25 billion.
Hershey Co. shares rose as much as 21 percent Wednesday to $117.79, the biggest intraday gain in almost 14 years.
A spokesman for Deerfield, Illinois-based Mondelez declined to comment. Representatives for Hershey didn’t immediately respond to a request for comment.
Acquiring Hershey would balance the portfolio of Oreo maker Mondelez, which is mostly focused overseas. Hershey generated almost 90 percent of its revenue in North America last year, with the majority of that coming from selling chocolate in the U.S. The combination also would vault Mondelez past Mars Inc. as the world’s biggest confectioner, according to Euromonitor International.
“From a geographic perspective, the move makes sense,” said Jack Skelly, an analyst at Euromonitor. “Mondelez has achieved its position as the second-largest confectionery manufacturer in the world without any sizable presence in the U.S.”
Mondelez pledged to maintain jobs and move the combined company’s headquarters to Hershey, according to the Journal report. The new business also would take the Hershey name, the newspaper said.
Mondelez, which split from Kraft Foods in 2012, was set up to focus on faster-growing emerging markets. The global slowdown has dealt the company a blow in recent years and made the U.S. market look more attractive.
But Hershey faces its own challenges. It’s suffering from a cutback in sugar consumption by Americans, prompting it to push deeper into foods like beef jerky. The company’s troubles have made it more of a takeover target, analysts say. The question is whether the Hershey family trust would go along with a buyout. The Hershey Trust Co., which controls about 80 percent of voting rights, has long been seen as an impediment to sealing a deal.
“They control the company,” said Bloomberg Intelligence analyst Ken Shea. “If it’s a friendly deal, presumably they’ll have the trust on board.”