Mondelez International's Potential Acquisition of Hershey

Global snack giant Mondelez International (NASDAQ:MDLZ) is considering acquiring Hershey Co (NYSE:HSY) to strengthen its position in the U.S. chocolate market. According to Stifel analysts, this acquisition could also allow Hershey’s iconic brands, such as Reese’s, to expand internationally.

Acquisition Details

• Exploration Status: Mondelez is reportedly exploring the acquisition, although Bloomberg News did not disclose financial specifics.
• Valuation Estimates: Analysts estimate Hershey’s share value could range from $200 to $225 in a potential deal. Despite this higher valuation, Mondelez may only see slight profitability by the second year, following initial losses.

Hershey Trust Influence

The Hershey Trust, controlling about 80% of Hershey’s voting power, remains a critical obstacle. Historically resistant to selling, the Trust previously declined Mondelez’s acquisition attempt in 2016. Its decision will likely influence Hershey’s future.

Strategic Advantages

If the acquisition proceeds, Mondelez could benefit from cost efficiencies and synergies, especially with revenue streams. The potential for revenue synergies is significant, as it would provide Mondelez with market entry in the U.S. to leverage the Cadbury and Milka brands, enhancing Hershey’s lineup and enabling global expansion for products like Reese’s.