A Mondelez International, the snacks and sweets company, has once again reached out to the iconic American chocolate maker Hershey to buy the business, people familiar with the discussion told Bloomberg. The deal, if it gets off the ground, would create a food giant with combined sales of nearly $50 billion and surpass the purchase of Kellanova for the Mars completed this year, worth R$36 billion, including debts.
Chicago-based Mondelez has made preliminary approaches about a possible combination, said the people, who asked not to be identified because the discussions are private.
At the end of last week, Mondelez had a market capitalization of approximately $84 billion, while Hershey was valued at $35 billion.
Second attempt
This is not the first time that Mondelez has sought a deal with Hershey. In 2016, it dropped out of discussions after the chocolate maker rejected a $23 billion offer.
In 2024, Hershey shares are falling. From the beginning of the year until Friday (6), they fell around 6% on the New York Stock Exchange.
Hershey is worth approximately $40 billion including debt, according to data compiled by Bloomberg. That means an acquisition of the company, based in Hershey, Pennsylvania, would surpass the value of the year’s biggest deal — snack maker Mars’ agreement to buy Kellanova in August.
Hershey’s parent company
Any deal would require the backing of the Hershey Trust, which owns nearly all of Hershey’s Class B shares, giving it approximately 80% of the voting power in the company. But the exclusive fund has been slowly selling some of its Hershey shares in an effort to diversify its holdings.
According to sources, deliberations are in the early stages and there is no certainty that the discussions will lead to an agreement.
A Hershey representative said the company does not comment on market rumors. A Hershey Trust spokesperson could not immediately be reached by Bloomberg for comment. A Mondelez representative did not respond to multiple requests for comment.
READ MORE: The Mars empire: Pringles, Cornflakes, M&M’s and Snickers now belong to one company
Difficulties in the sector
The packaged food industry has faced declining volumes, slow growth and a weakened global consumer.
Companies are looking for innovation and new markets to bolster sales, while consumers are beginning to reject price increases and become more health conscious — a trend that could lead to consolidation.
Understand the current situation of companies
Mondelez makes Ritz crackers, Oreo cookies and Toblerone chocolate bars. Analysts at Bloomberg Intelligence said in September that the company is “receptive to acquisitions” and has the debt capacity for mergers and acquisitions as it seeks to expand its chocolate, cookies and baked snacks divisions. The company reported third-quarter earnings that beat estimates in October.
Hershey, founded in the late 19th century, is known for its chocolate and candy brands, including Hershey’s Kisses, Reese’s Peanut Butter Cups and PayDay. It expanded its sweets portfolio in November with the acquisition of Sour Strips.
The company, led by CEO Michele Buck, has been hit by record cocoa prices, which have fallen from their peaks but remain significantly elevated compared to previous years. Sugar costs are also high. Last month, Hershey cut its net sales and profit growth forecast as inflation-weary consumers watch their budgets.
