Mondelez considers Hershey acquisition amid industry challenges
USA – Cadbury-owner Mondelez International is reportedly exploring the possibility of acquiring U.S. confectionery giant Hershey, according to Bloomberg News.
The acquisition, if successful, would create one of the world’s largest confectionery companies.
According to Bloomberg, Mondelez has made a preliminary approach regarding the potential merger valued at approximately US$84 billion, Sources familiar with the matter indicated that discussions are still in the early stages, and there is no guarantee that the talks will result in a deal.
The Hershey Trust Company, which holds voting control over The Hershey Company, will play a pivotal role in any potential transaction. The trust, a charitable entity benefiting the Milton Hershey School, must approve any deal involving the Pennsylvania-based chocolatier.
This is not the first time Mondelez has shown interest in acquiring Hershey. In 2016, Mondelez withdrew a US$23 billion takeover bid after Hershey rejected the offer.
At the time, sources suggested Hershey would not accept negotiations for an offer below US$125 per share.
The potential merger comes at a challenging time for the confectionery industry, with companies facing rising input costs, particularly for cocoa and sugar. These pressures have led to price increases for products, which have, in turn, weakened consumer demand.
Hershey recently reported a decline in quarterly sales to nearly US$3 billion, reflecting softer consumer demand. In contrast, Mondelez posted a modest sales increase of nearly 2 percent, reaching US$9.2 billion.
The confectionery sector has also been impacted by global sugar shortages, exacerbated by climate challenges such as drought in Thailand and dry spells in India. These conditions have driven up sugar prices, prompting Mondelez to announce further price increases for its products earlier this year.
Mondelez CEO Dirk Van de Put emphasized the need for straightforward price adjustments to manage inflation, ruling out shrinkflation as a viable solution.
This potential deal follows other significant moves in the industry, including Mars’ US$36 billion acquisition of Cheez-It maker Kellanova earlier this year, which combined popular brands such as M&M’s and Pringles under one roof.
If successful, a Mondelez-Hershey merger would mark a transformative moment in the confectionery sector, reshaping the competitive landscape amid ongoing economic and environmental challenges.
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