Mondelez International, Inc., Deerfield, Ill., said Aug. 29 it has ended discussions with the Hershey Co. regarding a potential merger after the chocolatier rebuffed its latest acquisition offer, the second one since June, putting an end to a monthslong takeover campaign that would have created the world’s largest candy company. The company indicated it would be difficult to strike a deal before next year because of shifting dynamics at its controlling shareholder, the Hershey Trust Co., according to a report in the Wall Street Journal.
"As the world's leading snacking company, we remain focused on successfully executing our strategy to deliver both sustainable top-line growth and significant margin expansion and are well-positioned to continue to deliver value to our shareholders," said Mondelez chairman and CEO Irene Rosenfeld. "Our proposal to acquire Hershey reflected our conviction that combining our two iconic American companies would create an industry leader with global scale in snacking and confectionery and a strong portfolio of complementary brands. Following additional discussions, and taking into account recent shareholder developments at Hershey, we determined that there is no actionable path forward toward an agreement. While we are disappointed in this outcome, we remain disciplined in our approach to creating value, including through acquisitions, and confident that our advantaged platform positions us well for top-tier performance over the long term," Rosenfeld said.
Mondelez initially approached the takeover bid with Hershey in June, offering the Hershey, Pa., chocolate company $107 a share in a transaction valued at more than $25 billion, including the assumption of debt. After receiving input from the company management and outside financial and legal advisers, Hershey’s board of directors unanimously rejected the expressions of interest, determining that it "provided no basis for further discussion between Mondelez and the company."
The deal was largely hinged on the Hershey Trust, which controls 80 percent of the company’s stock and which has opposed selling the company in the past.
Moving forward, the maker of Oreo cookies and Ritz crackers said it will continue to execute its plans to deliver sustainable growth and shareholder value. Analysts say this likely reinforces the notion that Hershey is unattainable as an acquisition target in light of its majority ownership by a trust that for years has been reluctant to sell.