The Hershey Trust Co., the principal owner of Hershey Co (NYSE:HSY)., has turned down a preliminary takeover offer from Mondelez International Inc (NASDAQ:MDLZ)., according to a report from Bloomberg, citing sources close to the situation. This move could put an end to a potential acquisition that would have united two major players in the food industry, with combined sales nearing $50 billion.
The Hershey Trust Co., which wields about 80% of the voting rights at Hershey Co., reportedly rejected the proposal on the grounds that the offer was insufficient. As the holder of nearly all the Class B stock of Hershey Co., the trust's approval is crucial for any takeover to proceed.
Earlier in the week, Bloomberg News revealed that Mondelez had initiated a preliminary approach towards Hershey Co. This is not the first time Mondelez has shown interest in acquiring the chocolate manufacturer. A previous attempt in 2016 was abandoned when Hershey Co. rebuffed a $23 billion offer from Mondelez.
On Wednesday, Mondelez announced a stock buyback plan of up to $9 billion and reaffirmed its dedication to strategic capital allocation, which includes reinvesting in its brands and pursuing smaller, bolt-on acquisitions. Given Hershey Co.'s valuation of over $40 billion, including debt, the acquisition would be a significant one for Mondelez.
Adam Crisafulli from Vital Knowledge commented that the buyback announcement by Mondelez "poured cold water" on the prospects of a deal with Hershey Co.
Following these developments, Mondelez's shares saw an increase of 3.4% in New York trading, while Hershey's stock experienced a 4% decline.
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