Hershey Co. shares soared more than 14% Monday after insiders suggested Mondelez International Inc. may attempt a $50 billion takeover. While the preliminary talks remain fluid, analysts believe the combined entity would dominate global confectionery markets, assuming the Hershey Trust approves and costs don’t derail progress.
Hershey Shares Surge on Mondelez Buyout Reports
In early Monday trading, shares of Hershey Co. increased by over 14% after Bloomberg (via Investing.com) reported that Mondelez International Inc. is considering buying out the famous chocolate company.
With combined yearly sales of roughly $50 billion, the proposed merger would form a food industry behemoth.
Bloomberg reports that Mondelez, the creator of Ritz and Oreo crackers, has taken a first approach on the possible merger, and talks are reportedly underway.
But according to Bloomberg's sources, there's no guarantee that talks will result in a settlement.
Hershey Trust Holds Key to Potential Takeover
According to Bloomberg, this isn't Mondelez's first foray into the Hershey market; in 2016, the business attempted to acquire Hershey for $23 billion but was refused.
Because it controls 80% of Hershey's voting power, the Hershey Trust Co. would probably have to approve a takeover. Bloomberg did point out, though, that talks are still in their early stages, and that a deal may or may not come to fruition.
The trust has been gradually selling off part of its Hershey Co. shares in an attempt to diversify its assets, according to the report.
Packaged Food Industry Faces Inflation Pressures
The possible acquisition is happening at a time when the packaged food industry is encountering difficulties, including slower growth and increased ingredient costs.
The candy maker Hershey, whose products include Reese's and Kisses, has lately reduced its sales and profit projections due to inflationary pressures and the impact of rising cocoa and sugar prices.
Mondelez Eyes Expansion Amid Industry Challenges
Mondelez has expressed interest in growing its snack and chocolate businesses, according to Bloomberg, and analysts have pointed to the company's financial strength as a reason for this.
If finalized, the deal would be one of the biggest of the year, surpassing even Mars Inc.'s recent $36 billion purchase of Kellanova.


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