Hershey’s pivotal shareholder, The Hershey Trust Company, has dismissed the initial acquisition proposal put forth by Mondelez International, labelling it insufficiently valued.
The Hershey Trust Company, crucial in approving any acquisition, deemed the proposal from Mondelez—known for owning Cadbury—as undervalued, according to Bloomberg News. Recent developments indicate Mondelez’s tentative engagement with Hershey for a potential merger, albeit at an incipient stage.
Recent corporate earnings reports show Hershey’s quarterly sales dipped to approximately $3 billion (£2.3 billion) amid subdued market demand. Conversely, Mondelez experienced a near 2% rise in sales, reaching $9.2 billion (£7.2 billion).
Historically, Mondelez has displayed interest in acquiring Hershey, notably with a $23 billion (£18 billion) offer in 2016, which Hershey also declined, citing it as insufficient. The current scenario reflects a continuation of Mondelez’s pursuit of Hershey, amidst strategic financial maneuvers.
Mondelez’s announcement of an extensive share buyback programme—up to $9 billion (£7 billion), commencing on 1 January through 2027—fuels scepticism regarding the plausibility of a takeover. This buyback scheme succeeds a $6 billion (£4.7 billion) programme, with $2.8 billion (£2.2 billion) remaining, set to expire at the end of 2025.
The repeated declines of Mondelez’s acquisition attempts by Hershey underscore significant valuation disagreements, casting doubt on the feasibility of a merger. This situation unfolds amid strategic financial adjustments by both corporations, adding layers of complexity to potential future negotiations.
