But Lash thinks the tie-up of Kraft and Heinz, and the merged company’s subsequent cost-cutting spree makes Mondelez still look comparatively bloated in its cost structure.
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If Mondelez were to be purchased by a rival firm like Kraft Heinz, it would create yet another dose of deja vu as Cadbury was spun off in October. 2012 by Kraft Foods Group as part of a snack food group that then changed its name to Mondelez global.
Representatives for Kraft Heinz and Pershing Square declined to comment.
Ackman’s moves are closely watched by the market, given his success as an activist investor.
The newly formed Kraft Heinz Co or PepsiCo Inc could be potential buyers of Mondelez, the Journal said, citing people familiar with the matter.
Morningstar equity analyst Erin Lash notes that just over a year ago, Mondelez announced a $1.5 billion plan to slash costs.
Mr Ackman, and his investment vehicle Pershing Square, knows the Mondelez chief executive, Irene Rosenfeld, as he was an investor in Cadbury during its controversial transatlantic takeover by Kraft in 2009.
Ackman’s Pershing Square Capital Management LP is buying about 120.3 million shares of the Deerfield, Illinois-based company.
Peltz, who said in April he was not pushing Mondelez to do a big deal, was quoted by CNBC as saying he was pleased Ackman sees value in Mondelez. Nelson Peltz’s Trian Fund Management holds a 3.1pc stake in the company and Mr Peltz is a Mondelez board member.
Stock at Mondelez was up over 5% in premarket trading on Thursday.
Sadly for Rosenfeld, there are strategies he could have used to keep Mondelez – seller of 58 brands of biscuits, beverages, cheese and groceries to supermarket chains, wholesalers, supercenters, club stores, mass merchandisers, distributors, convenience stores, gasoline stations, drug stores and value stores in 165 countries – out of this vulnerable position.
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Ackman, one of America’s most successful investors, joins fellow activist Nelson Peltz as an investor in Mondelez, which reported its seventh straight drop in quarterly revenue last week. The shares had climbed 27 percent so far this year before Ackman disclosed his stake, for the third-best performance on the Standard & Poor’s 500 Consumer Staples Index. We expect sales and earnings momentum to remain positive in the near term as the company realizes the benefits of ongoing cost savings measures, increased marketing investment and significant cash returned to shareholders.
