The takeover would have combined Hershey’s Reese’s, Kisses, and namesake chocolates with Mondelez’s Oreo, Cadbury brands, and Nabisco, creating a global snacking giant with $37 billion in annual sales.
Advertisement
In other company news, Hershey fell $12.02, or 11 percent, to $99.65 after snack food company Mondelez International said it was walking away from its proposal to buy Hershey for roughly $25 billion.
A representative for Hershey said the company had no comment beyond acknowledging that it had been in talks with Mondelez and that they had fallen through.
Shares of Mondelez, the maker of Oreo cookies and Cadbury chocolates, rose almost 4 percent in extended trading on Monday, while Hershey’s shares plunged about 12 percent.
The two companies had discussed a possible joining of forces for months but Hershey rejected a takeover bid worth $107 per stock share in June.
Citing sources familiar with the latest proposed deal, the WSJ Journal reported that Mondelez CEO Irene Rosenfeld told Hershey CEO J.P. Bilbrey last week that she was willing to raise the bid to $115 per share.
Illinois-based Mondelez, the maker of Oreo cookies and Cadbury chocolates, was seeking to boost its presence in the USA market with the acquisition of Hershey. In July, the trust said a board member was resigning.
The company’s strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth and increase in stock price during the past year. A deal would require the approval of the Hershey Trust, its largest shareholder, which has opposed a sale in the past. But she added, “I can confirm our understanding that Mondelez is no longer pursuing a combination with Hershey”.
Advertisement
The pullback means Mondelez – by not growing bigger – is a likely target for 3G Capital’s Kraft Heinz Co., bankers in the space said. Mondelez’s shares, on the other hand, rose 3% as investors seemed happy with the development. In a letter to his investors earlier this month, Ackman wrote that Mondelez shares are now undervalued, and that the issuance of Mondelez stock to fund the acquisition of Hershey would likely be costly for Mondelez shareholders.
