NEW YORK (AP) – Oreo cookie maker Mondelez says it has ended discussions to buy The Hershey Co, a combination that would have created a global powerhouse selling some of the world’s best known chocolates and snacks.
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At the end of June, Hershey’s board unanimously rejected a US$107-per-share bid from Mondelez that valued the Kisses maker at approximately $22.83bn.
Mondelez scrapped its bid to buy Hershey as last week the chocolatier rejected Mondelez’s second acquisition offer and hinted that the company can not strike a deal until next year because of “changing dynamics at its controlling shareholder, Hershey Trust Co., The Wall Street Journal (WSJ) reported, citing sources familiar with the matter”. An unfavorable de-rating Hershey shares are trading down in Monday’s after-hours ($98-99 per share).
Hershey stock was on track for its worst daily performance since September 2002, when the shares fell 11.9 percent.
The two companies continued talking, but Mondelez said merger talks are now over. A merger with Hershey would have created the world’s largest candy company and protected it from being targeted by competitors. “The question now for CEO Irene Rosenfeld is if there are any other buyout candidates – and whether getting swallowed by a bigger food giant such as Kraft Heinz Co.is inevitable”.
But “Rosenfeld faced staunch opposition from the Hershey Trust, a $12 billion charity created by the company’s founder a century ago”.
Cadbury owner Mondelez International has scrapped plans to merge with The Hershey Company. Shares of Hershey tumbled almost 12 per cent in after-hours trading.
In her statement, Rosenfeld reiterated the appeal of Hershey to Mondelez.
The Hershey Trust is revamping its board and management rules after coming under scrutiny for its spending practices.
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Stock dividends from the nation’s largest chocolate company help pay for expenses at the 2,000-student Milton Hershey School.
