Is a Mega-Merger Between Mondelēz and Hershey in the Works?
Is another merger between CPG titans in the works? Mondelēz International, Inc. is reportedly seeking a sweet deal to team up with fellow legacy CPG The Hershey Co. According to a Bloomberg article, Chicago-based Mondelēz has approached Hershey about a possible merger.
Citing anonymous sources, Bloomberg reported that Mondelēz is exploring a business combination that could lead to a mega-company with potential sales of $50 billion. In November, Hershey, Pa.-headquartered Hershey reported its third quarter financial results, showing a 1.4% dip in consolidated net sales to reach $2.98 billion and a 12.7% decline in reported net income. Around the same time, Mondelēz released its Q3 report indicating a 1.9% bump in net revenue and a 12.5% slide in operating income.
Any approach by Mondelēz won’t be an easy sell, however, given The Hershey Trust that is in place. Set up to advance the legacy of founder Milton Hershey and his wife, Catherine, the Trust maintains a majority stake in the namesake business and reportedly holds 80% of the company’s voting power.
Another potential roadblock is the Federal Trade Commission (FTC), which has a track record of investigating large mergers across industries, including the current legal logjam affecting the deal between The Kroger Co. and Albertsons Cos.
Whether or not The Hershey Trust is open to even tentative talks, the company has a history of rejecting mergers. In 2016, Hershey nixed a previous offer by Mondelēz.
Large mergers between snacks and sweets companies are not without recent precedent. In August, Mars, Inc. announced that it was buying Kellanova – spun off from The Kellogg Co. just a year before – for $35.9 billion.
In other news, The Hershey Co. reported on Dec. 10 that Michael Del Pozzo, president, U.S. Confection, is exiting the company. President and CEO Michele Buck will take over that role in the interim, during the hiring process to replace him.
