Mondelez explores Hershey acquisition amid confectionery challenges
Deal News | Dec 10, 2024 | EIN
Mondelez International, the owner of Cadbury, is exploring a potential acquisition of Hershey, a leading U.S. confectionery company. This merger, if successful, would form one of the largest chocolate and candy companies globally. Mondelez's preliminary offer values the potential deal at approximately $84 billion, indicating serious interest despite the early-stage of discussions. The Hershey Trust Company, holding significant control over Hershey, is essential for any transaction approval due to its status as a charitable entity benefiting the Milton Hershey School. Mondelez's interest in Hershey is not new; it unsuccessfully bid $23 billion in 2016. The industry faces challenges such as rising cocoa and sugar costs, which have suppressed consumer demand. Hershey reported declining sales, while Mondelez showed marginal sales growth amidst these adversities. The industry has been further strained by global sugar shortages, prompting price hikes by Mondelez. CEO Dirk Van de Put has announced price increases rather than product downsizing to combat inflation, reflecting broader industry trends following Mars' acquisition of Kellanova.
Sectors
- Confectionery
- Food and Beverage
- Mergers and Acquisitions
Geography
- United States – Hershey is a major U.S. confectionery company, and the article details a potential acquisition involving U.S.-based entities and stakeholders.
- Global – Mondelez operates internationally, and the article addresses global challenges in the confectionery sector, such as sugar shortages affecting multiple countries.
Industry
- Confectionery – The article discusses potential mergers and current challenges within the confectionery industry, highlighting major players like Hershey and Mondelez.
- Food and Beverage – The discussion of global supply chain impacts on sugar and cocoa emphasizes the broader context of the food and beverage industry's current economic challenges.
- Mergers and Acquisitions – The potential acquisition of Hershey by Mondelez is a significant M&A activity within the confectionery sector.
Financials
- US$84 billion – Approximate value of Mondelez's potential acquisition offer for Hershey.
- US$23 billion – Value of Mondelez's previous unsuccessful bid for Hershey in 2016.
- US$125 per share – Reported minimum bid Hershey was willing to entertain from Mondelez in 2016.
- US$3 billion – Hershey's recently reported quarterly sales.
- US$9.2 billion – Mondelez's recently reported quarterly sales.
Participants
| Name | Role | Type | Description |
|---|---|---|---|
| Mondelez International | Potential Acquirer | Company | A global snacking powerhouse and the owner of brands like Cadbury, potentially looking to acquire Hershey. |
| The Hershey Company | Target Company | Company | A leading American chocolate and confectionery manufacturer being considered for acquisition by Mondelez. |
| Hershey Trust Company | Major Stakeholder | Charity | Charitable entity with controlling interest in Hershey, required to approve any acquisition. |
| Dirk Van de Put | CEO of Mondelez | Person | The CEO of Mondelez, who has ruled out shrinkflation as a strategy for the company. |