A Hershey takeover bid by Mondelez International, owner of Cadbury and Trident chewing gum, has been scrapped after it was rejected by Hershey. The massive $23 billion bid in the form of stock and cash was initially made in June. It would have made Mondelez the largest confectionary manufacturer in the world. However, Hershey turned it down, and Mondelez has now abandoned it, the company announced Monday.
According to Mondelez Chief Executive Irene Rosenfeld, the company found the outcome “disappointing”. She said that Mondelez could see “no actionable path forward toward an agreement”. She went on to state that her company was convinced that a combination of the two “iconic American companies” would have created a global snacking and confectionary industry leader with a “strong portfolio of complementary brands.”
Hershey is well known for its Oreos and peanut butter cups, as well as its chocolate. 99% of the company’s revenue comes from North America. The decision to abandon the bid was made partially due to changes in Hershey’s board structure and company rules. It is controlled by the Hershey Trust, which holds a majority of the shares. This is a charity which has been responsible for blocking previous bids for the company.
The Trust is in the process of reorganizing its board and management rules, prompted mainly because its spending practices have come under scrutiny. It will be next year before these changes have been made, and it has been said that shareholders have no wish to discuss takeover bids until the reorganization has been completed.
In any case, it was reported, Mondelez had offered just $107/share whereas the Hershey board had been looking for at least $125. When news of the failure of the Hershey takeover bid was made public, shares in Hershey dropped up to 12% in late trading in the US and Mondelez shares rose by close to 4%. It is unknown whether or not there will be a further attempt to combine the two companies next year, but the current takeover bid is now off the table.
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