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LONDON, UK / ACCESSWIRE / July 1, 2016 / Active Wall St. blog coverage looks at the headline from Hershey Co. (NYSE: HSY) and Mondelez International Inc. (NASDAQ: MDLZ). Register with us now for your free membership and blog access at:
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Following a surge in the shares of Hershey Co. post reports of a potential merger with rival Mondelez International Inc. for approximately $23 billion, Hershey's board came forward and denied claims of any takeover. In a statement, Hershey's management said it turned down the offer after determining "that it provided no basis for further discussion between Mondelez and the company." Hershey said Mondelez offered it $107 per share in cash and stock - a 10% premium to its closing stock price ahead of the deal. The offer included other "non-monetary conditions."
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Candy King
Earlier on Thursday, Hershey's stock soared as much as 15.1 % after a report of Mondelez's offer. The potential merger of two of the top-five confectionary companies would have meant that the new entity would be the market ruler with 18 % of global candy market share. Also, the combined company would have surpassed Mars Inc., which has 13.3 % of the global market share as per data firm Euromonitor International Ltd.
Allergic to Acquisition
Mondelez is well known for Oreos, while Hershey is popular for its Hershey's Kiss and chocolate bars, but with the latest development the possible sweet merger seems to have come to an abrupt halt. This is not the first time though that another company showed interest in buying Hershey. In 2002, Wm. Wrigley Jr. Co. was keen on acquiring the Pennsylvania-based company for $12 billion.
Acquisition of Hershey's is complicated considering that the deals need to be approved by the trust that controls Hershey through a special class of stock. The Hershey Trust, which was established by Milton Hershey and his wife Catherine in 1905, owns 8.4% of the company's common stock, but it controls 81% of voting power.
Modelez's Shark Repellent tactics
Trade pundits reckon Mondelez was seeking the merger so that it could remain an independent company and not become an acquisition target itself. One proposed acquirer is Kraft Heinz Co. (NASDAQ: KHC), a food company whose controlling shareholders are 3G Capital and Berkshire Hathaway Inc. (NYSE: BRK.B).
Reports of Mondelez's proposed deal sent shares of other food companies higher on Thursday, as investors felt that other food companies may become alternative targets in the acquisition merry go round . Shares of Kellogg Co. (NYSE: K), closed Thursday session up 5.26%, while General Mills Co. (NYSE: GIS) saw its share prices rise by 5.10 %.
With the average American's sugar consumption cut down, Hershey already have a task ahead to ensure that its brand is able to ensure U.S. citizens continue to consume the company's sweets like before.
Hershey's shares surged 16.83% closing the trading session at $113.49. The company also notched its 52 week high of $117.70 during the trading session. Hershey's shares have gained 28.78% since the beginning of the year. Additionally, Mondelez's stock rose 5.91% to $45.51 at yesterday's close.
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