The proposed tie-up would have created a major global snacking giant with $37 billion in annual sales and could have combined Mondelez’s Nabisco, Oreo and Cadbury brands with Hershey’s namesake chocolates, Reese’s, and Kisses sweets.
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DEAL’S OFF: Hershey fell $12.36, or 11 percent, to $99.30 after snack food company Mondelez International said it was walking away from its proposal to buy Hershey for roughly $25 billion.
Hershey Trust, which wields 81 per cent of the voting power of Hershey shares, has historically been a thorn in numerous company’s deal-making efforts.
Mondelez shares initially popped on news of its bid for Hershey, but the stock has since come back down to earth.
In June, Mondelez had offered $107 a share for Hershey and reportedly had upped the bid recently to $115 a share.
The deal would have created the world’s largest confectionary company.
Both Hershey and Mondelez, which is based in Deerfield, Ill., have been under pressure amid a trend toward more-healthy eating and other factors. It said at the time that the offer provided “no basis for further discussion”.
The source added that Hershey was holding out for an offer of $125 per share.
“And we can confirm our understanding that Mondelez is no longer pursuing a combination with Hershey”.
The Hershey Trust is revamping its board and management rules after coming under scrutiny for its spending practices. With weak stock performance and meek historical growth numbers, Hershey couldn’t have contributed enough synergies to justify the multi-billion dollar deal price. News stories displayed here appear in our category for Business and are licensed via a specific agreement between LongIsland.com and The Associated Press, the world’s oldest and largest news organization.
Hershey is controlled by the Hershey Trust, an entity that maintains over 80% of the voting power at Hershey. 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 current Trust board has nine members, among which three of them will leave by the end of this year, and two by end of 2017, following an agreement between the Trust and the Pennsylvania Attorney General.
