Mondelez reportedly eyes Hershey's takeover
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Snacking giant Mondelez is kicking kisses on Hershey Co., eight years after being rebuffed by the iconic chocolatier, according to Bloomberg.
The big picture: Hershey is one of the toughest U.S. companies to buy, despite being publicly traded, due to its unusual corporate structure and a unique state law.
- The Hershey Trust owns most of the company's Class B shares, thus giving it effective voting control, and has stood in the way of past transactions. It's been selling down some of its position, in order to diversify, but hasn't publicly signaled that it's open for something more substantial.
- Pennsylvania's attorney general also can seek to block a sale, reflecting just how important the company is to the state's economy and psyche.
One more challenge: Antitrust regulators also might take a hard look at the maker of Oreo cookies buying the maker of KitKat bars, which would have combined revenue of nearly $50 billion.
- No word yet on if the FTC plans to challenge a planned $36 bilion tie-up between Mars and Kellanova, which was announced in August.
Catch up quick: Mondelez offered to buy Hershey in 2016 for $23 billion.
- Hershey ended trading yesterday with a $39 billion market cap, with shares closing up 10.8% on the Bloomberg report.
- Both companies declined comment.
Zoom in: Mondelez does have some good reasons to try again, no matter the obstacles.
- Hershey has been grappling with higher cocoa prices, driven by supply fears, and better-for-you food trends that are being amplified by weight-loss drugs like Ozempic.
- Merging two giant chocolate purchasers could help better control prices, which also could reduce margin pressures.
Look ahead: If Mondelez does get its foot in the door with Hershey Trust, don't be surprised if other strategics consider taking a bite.
