Hershey Trust Co., the principal owner of Hershey Co. (NYSE:)., has rejected a preliminary acquisition offer for Mondelez International Inc (NASDAQ:)., according to a Bloomberg report, citing sources close to the situation. This measure could put an end to a possible acquisition that would have united two major players in the food industry, with combined sales close to $50 billion.
Hershey Trust Co., which owns about 80% of the voting rights in Hershey Co., reportedly rejected the proposal on the grounds that the offer was insufficient. As the owner of nearly all of Hershey Co.'s Class B shares, the trust's approval is crucial for any acquisition to go through.
Earlier in the week, Bloomberg News revealed that Mondelez had initiated a preliminary approach toward Hershey Co. This is not the first time Mondelez has shown interest in acquiring the chocolate maker. An earlier attempt in 2016 was abandoned when Hershey Co. rejected a $23 billion offer from Mondelez.
On Wednesday, Mondelez announced a share buyback plan of up to $9 billion and reaffirmed its dedication to strategic capital allocation, including reinvesting in its brands and making smaller, bolt-on acquisitions. Given Hershey Co.'s valuation of more than $40 billion, including debt, the acquisition would be significant for Mondelez.
Adam Crisafulli of Vital Knowledge commented that Mondelez's buyback announcement “poured cold water” on the prospects of a deal with Hershey Co.
Following these developments, Mondelez shares saw a 3.4% increase in New York trading, while Hershey shares saw a 4% drop.
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