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.
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Mondelez first approached Hershey with a takeover bid in June, offering the Hershey, Pa., chocolate company $107 a share in a transaction valued at more than $25 billion, including the assumption of debt.
Any deal involving Hershey must be approved by the Hershey Trust, which has opposed potential deals in the past. We expect that shareholders would fmd it unacceptable for an acquisition of Hershey by Mondelez to delay or derail the productivity and cost savings transformation now underway at the company.
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.
A deal between the two companies would have created the world’s biggest maker of confectionary. Hershey rejected the deal, but investors at the time expected a higher bid or even a bidding war could be coming.
Mondelez Chief Executive Irene Rosenfeld privately indicated to Hershey officials a willingness to raise the bid to $115 a share last week, according to a person familiar with the matter.
Shares of the candy company Hershey plunged after it walked away from a merger proposal, and Apple slipped after the company was hit with a large tax bill in Europe. This means new board members of the trust, which must approve any sale of Hershey, could use such a transaction to substantially reduce its exposure in Hershey by partially cashing out on its stake. We also believe that Mondelez is better off on its own as Hershey wasn’t as great an acquisition target anyway.
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The changes at Hershey don’t come into effect until next year and its shareholders are said to have been averse to any transactions before then. The sharp drop in Hershey shares represents the largest one-day skid for the chocolate maker since 2002.
