Mondelez has made a US$23 billion bid for chocolate producer Hershey Co. in what would be a gigantic deal uniting two of the world’s best-known candy makers.
According to a report in Wall Street Journal, Mondelez, which makes Oreo cookies and Cadbury chocolate bars, recently sent a letter to Hershey proposing the tie-up at $107 a share.
Hershey promptly rejected the approach, saying its board determined the expression of interest provided no basis for further discussion with Mondelez.
The maker of eponymous Kisses and chocolate bars had a $21 billion market value Thursday ahead of the report. Mondelez had a $69 billion market value.
Jack Skelly, Food Analyst at Euromonitor International told FMCG Business: “The news that Hershey is the subject of a bid from Mondelez has certainly captured the imagination of those in the food industry. Yet rumours of an acquisition of Hershey have persisted for some time, suggesting the part public, part Trust-owned business has been seriously considering selling. From a geographic perspective, the move makes sense. Mondelez has achieved its position as the second largest confectionery manufacturer in the world without any sizeable presence in the US – the world’s largest chocolate confectioner market. Hershey sales are unlikely to cannibalise those of Mondelez’s elsewhere, with roughly 85% of its sales achieved in North America. In addition, both companies appear to have similar ambitions to diversify into a range of snack products, having acquired a range of meat and gluten free snack manufacturers in recent years.
This is a highly ambitious move by Mondelez given the symbolic status of the Hershey brand in the US. The acquisition would reinstate Mondelez as the largest confectionery player in the world by some margin, with around 18% market share, and the second largest packaged food manufacturer in the world, with 3% share of total sales.”