A Bitter Sweet Deal: Why Hershey Rejected Mondelēz’s Billion-Dollar Bid
- Avik Reengusia
- Dec 22, 2024
- 3 min read
Hershey Trust Co., which has roughly 80% of the voting power at the company, turned down the bid as too low, said the people, who declined to be identified
A Bitter-Sweet Deal: Why Hershey Rejected Mondelēz’s Billion-Dollar Bid
Mondelēz International, the snack powerhouse that gave the world Oreo, Cadbury, and Toblerone, has once again made a move for Hershey Co., America’s chocolate darling. But much like a half-melted Hershey’s bar left in the sun, the deal has quickly lost its shape. Hershey Trust Co., the charitable entity holding 80% of the voting power at the company, swiftly rejected the preliminary offer, calling it “too low” for their sugary empire.
This isn’t the first time Mondelēz has knocked on Hershey’s door, only to be shown the exit. Back in 2016, their $23 billion bid was also turned down. Now, with a rumored price tag exceeding $30 billion, Mondelēz is trying to sweeten the pot—but Hershey Trust isn’t biting.
Crunching Mondelēz’s Numbers
Mondelēz has built itself into a global snacking giant, gobbling up iconic brands and pushing its portfolio into over 150 countries. Its bold acquisitions, including the $19.5 billion Cadbury deal in 2010, showcase its appetite for growth. But acquiring Hershey would be more than a treat, it would be a feast.
With combined annual sales of nearly $50 billion, a merger could reshape the global confectionery landscape, bringing everything from Reese’s to Ritz under one roof. Still, it’s not all sugar and spice. In an industry where legacy brands face stiff competition from niche players, Mondelēz’s moves reflect the pressures of staying relevant. And while it’s eyeing Hershey’s dominance in the U.S. chocolate market (a 43% share, no less), the Trust’s iron grip on the company may leave Mondelēz’s ambitions stuck in the wrapper.
Hershey Trust Co. isn’t your typical shareholder—it’s more like the Willy Wonka of corporate governance, prioritizing values over profits. Established by Milton Hershey himself, the Trust uses Hershey’s profits to fund the Milton Hershey School, a home and education institution for underprivileged kids. With control over 80% of the voting rights, the Trust ensures that decisions align with Hershey’s legacy of community and philanthropy. This moral compass has been a thorn in Mondelēz’s side.
Reports suggest that even with promises to honor Hershey’s mission, Mondelēz hasn’t been able to win over the Trust. As one analyst quipped, it’s hard to buy the crown jewels when the gatekeeper isn’t in a selling mood. The markets were quick to react to the news. Hershey’s stock popped by 6% on optimism for a premium offer, while Mondelēz shares dipped slightly, signaling investor caution. Analysts speculate that for any deal to stick, Mondelēz would have to shell out more than $30 billion, a move that could strain its financial flexibility.
Adding to the intrigue, Mondelēz recently approved a $9 billion stock repurchase plan, a signal that it’s still playing the long game. However, as Vital Knowledge analyst Adam Crisafulli put it, this announcement has “poured cold water” on hopes of a Hershey takeover. In the words of Wall Street, it seems Mondelēz is hedging its bets.
What’s at Stake in the Chocolate Wars?
Beyond the headlines, the Hershey-Mondelēz saga reflects larger trends in the snack industry. Legacy brands are feeling the crunch as consumers gravitate toward healthier or more artisanal options. A merger could streamline operations, create cross-brand innovations (Oreo-infused Reese’s, anyone?), and consolidate market share.
But such a move also risks diluting Hershey’s identity, a fear the Trust is clearly unwilling to gamble on. For Mondelēz, the stakes are equally high—while it has the scale and resources to pursue this deal, it must convince its own shareholders that the sweet reward outweighs the hefty price tag. For now, Mondelēz’s ambitions remain unwrapped, with the Hershey Trust standing firm as the ultimate gatekeeper. As analysts and chocolate lovers alike watch closely, one thing is clear: in the battle for confectionery supremacy, sometimes even the sweetest deals can leave a bitter aftertaste.
