On Monday, JPMorgan provided their initial reactions to the recent rumors that Mondelez (NASDAQ:MDLZ) International, Inc. (NASDAQ:MDLZ) is considering an acquisition of The Hershey Company (NYSE:NYSE:HSY), currently valued at approximately $39.4 billion. Following a Bloomberg report, JPMorgan acknowledged the possibility of talks between Mondelez and Hershey but highlighted the significant obstacles that must be overcome for a deal to materialize. According to InvestingPro data, Hershey maintains a GOOD financial health score, with strong dividend credentials including 54 consecutive years of dividend payments.
JPMorgan also mentioned the potential impact on Mondelez's earnings per share (EPS), suggesting that a merger could lead to meaningful dilution. This could raise significant concerns among Mondelez shareholders regarding the benefits of such a deal.
The firm concluded by expressing a lack of comfort in asserting that a takeover is more likely than not, given the numerous challenges that need to be addressed. JPMorgan's comments reflect a cautious stance on the potential acquisition, with a clear message that many hurdles remain before any merger between Mondelez and Hershey can be confirmed.
In other recent news, Hershey has been the subject of potential acquisition speculation by Mondelez International, a development that has stirred interest in the market.
CFRA has upgraded Hershey shares from Sell to Hold amidst this speculation. The Hershey Trust Company, which holds nearly all Class B shares, equating to about 79% of the total voting power, presents a significant obstacle to any takeover attempts. Hershey has maintained strong fundamentals despite market challenges, with a 44.5% gross profit margin and regular dividend payments for over half a century.
Analysts from TD Cowen, JPMorgan, and Piper Sandler have maintained their hold and neutral stances on Hershey, with price targets of $190, $171, and $168 respectively. The company has also been diversifying its product portfolio, recently acquiring Sour Strips, a sour candy brand known for its bold flavors and strong social media presence.
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