Mondelez International, the owner of snack brands like Oreo and Nabisco, said Monday that it was no longer seeking to combine with Hershey after conversations between the two companies fell flat.
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In late-June 2016, Snacks giant Mondelez International made a takeover bid of $23 billion to acquire chocolate behemoth Hershey Co. Observers said a hostile takeover effort would have likely been unsuccessful, as the Milton Hershey Trust controls 80% of shareholder votes at Hershey-and the trust was against the deal. A deal would have been subject to the Hershey Trust, the chocolate company’s controlling shareholder. 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. Hershey on the other hand, appeared too demanding with reports crossing wires that it demanded an offer no less than $125 apiece before it could begin merger talks.
After receiving input from the company management and outside financial and legal advisers, Hershey’s board of directors unanimously rejected the expressions of interest “and determined that it provided no basis for further discussion between Mondelez and the company”. The acquisition would have created synergies and helped Hershey expand its reach overseas, while boosting Mondelez sales in the US. Wrigley Jr. wanted to buy Hershey in 2002 and again when Hershey wanted to buy Cadbury eight years later. Creating delicious moments of joy in 165 countries, Mondelēz global is a world leader in biscuits, chocolate, gum, candy and powdered beverages, with billion-dollar brands such as Oreo, LU and Nabisco biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolate; and Trident gum. Indeed, Mondelez called off the pursuit because the deal was attractive but not essential and because it was eager to avoid overpaying, the person said. Mondelez, however, did not mention any potential upcoming proposals for acquisition.
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The Journal reported last month that the Hershey Trust, which oversees billions of dollars for a local, nonprofit school had agreed to make significant governance changes that could affect the future of the chocolate company, citing people familiar with the matter.
