Hershey co turns down mondelez offer, wants it to raise the bid
On Thursday, the giant chocolate company Hershey Co (NYSE:HSY) has rejected a buyout offer made by Mondelez International Inc.( NASDAQ:MDLZ) that would have brought some of the best chocolates and cookies under one roof. Noodles and company yorktown This deal would have combined Mondelez’s chocolate business in Hershey.
The company confirmed that Mondelez has made a preliminary bid for a mix of cash and stock, amounting up to $107 for every share of Hershey common stock. Where are noodles from According to the Factset, this deal was expected to be valued at nearly $22.3 billion. Noodles plus menu However, following a review, Hershey board has unanimously rejected the offer. Noodles and company boise The board made a claim that the proposal provided “no basis for further discussion.”
As per the investors, Mondelez, which is the maker of Cadbury chocolate in Europe and has more international scope, could easily bid up to $120 per share or more. Noodles and company yelp Any such deal is subject to the approval by the Hershey Trust, which owns more than majority of its shares.
If this acquisition would have been successful, the combined company will get around 18% of the global candy market, making the merged entity industry’s largest player, as per Euromonitor. Noodles menu calories This deal would have provided Mondelez with a much bigger presence in its domestic candy market. Noodles and company 76th st While Mondelez controls Cadbury internationally, Hershey has got the licensing rights to the brand in the US.
Reportedly, Mondelez has announced that it would change its name to Hershey after the merger and will run its global chocolate operations from the central Pennsylvania town.
At present, Mondelez gauge majority of its revenues from its international markets, while Hershey gets major chunk of revenues from North America. Noodles and company prices Recently, Mondelez has come under pressure from its activist investor William Ackman, who wishes to increase revenues or sell out the company.
On the other side, Hershey, whose brands such as Reese’s, Jolly Rancher, Good & Plenty, Rolo, and Twizzlers, is facing its own challenges, which includes a cutback in sugar consumption by Americans and a moderately small international business as compared to other candy giants that have globalized operations. Noodles and company delivery To counter this, the company aims to diversify its sugar-based products. Noodles king menu Last year in March, it has acquired the company that makes and markets Krave jerky.
In 2015, Hershey had reported sales of $7.4 billion and $512 million in profits, while Mondelez posted $29.6 billion and $7.3 billion in sales and profits, respectively.
As per analyst David Palmer at RBC Capital, this deal would eventually happen, since the control of Hershey Company is a fragment of the Hershey Trust’s mission statement. Noodles and company laurel However, the analyst said that this proposal by Mondelez could shoot more aggressive cost-reduction measures at Hershey.
On the flip side, analyst Ken Goldman at J.P Morgan believes that at least part of Mondelez’s rationale for making the buyout proposal was probably “defensive in nature,” as the company did not want to be acquired by The Kraft Heinz Co.
According to the analyst, in the past, Hershey Trust has disapproved buyout proposals; but recently, its board members have found themselves “in the hot water.” Earlier this year, the start attorney general has sent a letter to trust in order to seek the resignation of three of its board members and the cut of board compensation.
This merger between Mondelez and Hershey would be marked as the latest chapter in a series of deals in in the packaged food industry, where the companies are seeking for ways in order to improve their financial results while up against tumbling sales growth in key markets such as US.
A Morningstar analyst, Erin Lash, who covers the two companies, revealed that such offer is likely to benefit both parties, bearing in mind Hershey is the leading chocolate company in the US. Noodles and company east lansing In contrast, Mondelez’s confectionary sales are mainly in other countries.
According to Ms. Noodles and company workday Lash, such a merger will have a substantial hurdle which it needs to clear in order to gain regulatory approval from the Milton Hershey School Trust, which holds more than 80 percent of the voting power in the company.