Hershey stock soars after report of Mondelez takeover bid

Hershey stock soars after report of Mondelez takeover bid

According to research firm Euromonitor, the merger between Mondelez and Hershey would create the world’s biggest candy company, as it merges the second- and fifth-largest company in the industry by revenue.

Hershey did not immediately respond to requests for comment. But it would have to first be approved by the Hershey Trust, the shareholder that owns the vast majority of the candy giant’s votes and has been reluctant to sell in the past.

Hershey reported $7.4 billion in sales in 2015, while Mondelez had $29.6 billion in sales. In 2002, Hershey attempted to look at the possible sale of the company, and it received interest from various parties, including Mondelez’s predecessor company Kraft Foods. Mars Inc., which makes M&M’s and Snickers, is now No. 1 with 13.5 percent of the market. The Hershey Trust Co., which controls about 80 percent of voting rights, has always been seen as an impediment to sealing a deal.

Tigress Financial Partners LLC analyst Philip Van Deusen said he expected the offer price to increase, given the rise in Hershey shares. Mondelez International Inc. said it would take on Hershey’s name and move its global headquarters to Hershey, Pennsylvania, according to the Journal. (MDLZ) had made a takeover bid for the snack foods company.

“The Trust…is outwardly very committed to keeping the company independent”, Bernstein analyst Alexia Howard had said in June a year ago. Nor did it matter that the company isn’t experiencing much growth; Hershey’s core offerings remain iconic American products, and its net income has been pretty consistent over the past few years.

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