Jamie Spencer
Mondelez International Inc., the global snacks giant behind Oreo cookies and Toblerone chocolate bars, is reportedly exploring a bid to acquire iconic U.S. chocolate maker Hershey Co. If successful, the merger would create a food powerhouse with combined sales approaching $50 billion, according to sources familiar with the discussions.
A History of Interest
This is not the first time Mondelez has pursued Hershey. In 2016, the company walked away after Hershey rejected a $23 billion offer. Now, with Hershey’s market value standing at approximately $45 billion, including debt, Mondelez appears poised to try again.
Shares of Hershey jumped as much as 19% on Monday following the report, marking their biggest intraday gain in more than eight years. By mid-morning, the stock was up 12%, giving Hershey a market capitalization of $40 billion. Mondelez shares, however, fell 2%, valuing the company at roughly $83 billion.
Challenges to a Deal
A potential acquisition hinges on the approval of Hershey Trust Co., which owns nearly 80% of the company’s voting power via its Class B shares. The trust has been gradually selling shares to diversify its portfolio but remains a key decision-maker. Should the trust signal support for a takeover, other suitors may emerge, further complicating the deal.
Discussions are still in the early stages, and there is no guarantee of an agreement. Hershey representatives have declined to comment on market speculation, and Mondelez has not responded to multiple requests for comment.
The Broader Industry Context
The packaged-food industry faces slowing growth, shrinking volumes, and increasingly price-sensitive consumers. Companies like Mondelez and Hershey are exploring innovation and new markets to sustain revenue. Rising costs for key ingredients like cocoa and sugar add pressure, with Hershey recently cutting its sales and earnings outlook.
Mondelez, which has been open about its acquisition ambitions, aims to bolster its chocolate, biscuits, and baked snacks divisions. Analysts at Bloomberg Intelligence noted the company’s strong debt capacity for mergers and acquisitions.
Hershey’s Legacy and Challenges
Founded in the late 19th century, Hershey is synonymous with American chocolate. Its flagship products include Hershey’s Kisses, Reese’s Peanut Butter Cups, and PayDay candy bars. Under CEO Michele Buck, the company expanded its portfolio with the acquisition of Sour Strips in November.
However, record-high cocoa and sugar prices, coupled with inflationary pressures, have strained Hershey’s operations. While cocoa prices have eased slightly, they remain elevated, squeezing profit margins.
What’s Next?
With Mondelez receptive to acquisitions and Hershey’s long-term challenges mounting, the industry is watching closely. A merger would not only reshape the competitive landscape but could also set the stage for further consolidation in the food sector.
