Mondelēz may merge with Kraft Heinz after ending Hershey pursuit: Analyst

Hershey holds rights to manufacture and sell Cadbury chocolate in the US, which has prevented Mondelēz from selling its powerhouse brand in the world's biggest chocolate market.

Mondelēz has ended its pursuit of Hershey nearly two months after the US chocolate giant rejected a $23bn takeover. Analysts speculate the Oreo owner may now merge with Kraft Heinz or PepsiCo.

Mondelēz reportedly upped its bid for Hershey to around $25bn, but said yesterday it had abandoned its pursuit.

Mondelēz’s CEO, Irene Rosenfeld, said in a statement: “Our proposal to acquire Hershey reflected our conviction that combining our two iconic American companies would create an industry leader with global scale in snacking and confectionery and a strong portfolio of complementary brands.” 

She added that taking into account recent shareholder developments at Hershey (referring to changes at the Hershey Trust), Mondelēz determined that “there is no actionable path forward toward an agreement”.

Analysts also believe Mondelēz’s Hershey pursuit was spurred by recent changes within the Hershey Trust, which holds 81% of Hershey shares.

The current Trust board has nine members, among which three of them will leave by the end of this year, and two by end of 2017, following an agreement between the Trust and the Pennsylvania Attorney General.

Either merge with large-scale companies or be taken over by Kraft

If Mondelēz indeed wants to expand its confectionery and snacks footprint, it should seek acquisitions or mergers with other large-scale companies in that space, including Lotte, Ferrero, or Perfetti Van Melle, according to SIG’s analyst, Pablo Zuanic.

“In snacks, of course, there are smaller players in the natural and organic space,” he added. However, in the end, SIG believes Mondelēz will just run out of time and will be taken over by Kraft Heinz Company, according to Zuanic’s note in SIG’s report.

Mondelēz’s spokesperson Valerie Moens told ConfectoneryNews the company cannot comment on any possible purchase move in the next 12 months.

Mondelēz leaders are scheduled to present at the Barclays Global Consumer Staples Conference on Wednesday, Sept. 7 at 9 a.m. EDT.

Morningstar analyst Erin Lash previously said in a note that it was “far from a surprise” that Mondelēz is interested in the US chocolate space, because the company has essentially been locked out of the US chocolate category after Hershey acquired the rights to the Cadbury US brands in 1988.

Mondelēz recently bought the license to produce Cadbury-branded biscuits from UK’s Burton’s Biscuits Company.

Related News

Mondelēz may pursue #4 US chocolate firm Ferrero as a Hershey alternative, says Mintel analyst Photo credit: Zoha Nve

Mondelēz may move for Ferrero after Hershey saga: Mintel

Mondelēz maps out plan to expand its footprint in the US chocolate market. Photo: MDLZ

Mondelēz plans sole US chocolate invasion with Milka Oreo and Green & Black's

Mondelēz appointed Bulletproof as its design agency in 2014.

Mondelēz backs 'boldly British' Trebor mints redesign with $1.6m ad campaign

Glenn Caton to lead Mondelēz in in Demark, Norway, Sweden, Finland, the UK and Ireland. ©iStock/fpdress

Mondelēz names Northern Europe president amid UK innovation push

One of the Mondelēz R&D hubs is in Bournville, in the UK

Mondelēz ramps up presence in emerging markets with $65m R&D investment

Hershey’s Cookie Layer Crunch launches in December and will compete with Mondelēz's Milka Oreo

Hershey taps multi-textural demand with Cookie Layer Crunch launch

Mondelēz is rated positive by global trading firm, SIG, due to the company’s M&A optionality.

Mondelēz rated positive by SIG despite revenue dip in Q3

Hershey to close its store in Chicago by January 2017, but hasn't ruled out a return to the city. Photo: Hershey

Hershey to close own-store in Chicago to focus on larger experiential stores

Pic: Mondelēz

Mondelēz launches Green & Black’s bars with Cocoa Life Program label

Chips Ahoy is one of Mondelēz's largest biscuits brands along with Oreo, Ritz and BelVita.  Photo: Mondelēz

Mondelēz adds new flavors to Chips Ahoy Thins cookie portfolio

The brownies mark the first time for the Milka brand to enter the bakery segment.  Photo: Mondelēz

Mondelēz’s Milka brand enters brownies segment, ready to roll out across Europe

Mondelēz grows below the global snacks market and marginally misses organic growth target in 2016.  Photo: MDLZ

Mondelēz revenues slide 13% in 2016 as analysts casts doubt on Kraft-Heinz merger

Lotte is the eighth largest chocolate and gum brand in the Beijing metropolitan area.  Photo: Jaehwan Kim

Lotte to face 'severe consequences' if it allows US missile system, warns China

Terry Thomas, President AAK USA, Inc. and Anne Mette Olesen, Chief Marketing Officer, AAK AB, cut the ribbon to officially open AAK’s AAKtion Lab in Edison, New Jersey.  Photo: AAK

Hershey looks to upgrade chocolate confectionery lab upon visiting AAK’s new innovation center

The Kentucky facility is Perfetti van Melle's only manufacturing site in the US.  Photo: Perfetti van Melle

Perfetti van Melle receives $500k tax incentives from Kentucky for facility expansion

Mondelēz said the Wall Street Journal's report on the CEO change gives its readers the wrong impression.  Photo: ©iStock/DanielBendjy

Rosenfeld remains focused on 'building world’s best snacking company' as departure rumors swirl

Mondelēz posted organic growth of 0.6% during its first quarter of 2017.  Photo: Mondelēz website

Mondelēz Q1 a ‘solid start’, driven by Oreo, Cadbury, belVita and Ritz

The UK-based Burton's Biscuits, owned by Canada's Ontario Teachers' Pension Plan, manufactures Cadbury, Wagon Wheels and Lyons biscuits

Mondelēz 'in talks' to acquire Cadbury biscuits license from Burton’s

China is Mondelēz’s biggest market in Asia.(left) Stephen Maher, President of Mondelez China; (right) Jing Jie, Vice-President of Alibaba Group  Source: Mondelēz

Mondelēz partners with China’s Alibaba to support $1bn global e-commerce goal

Burton's Biscuit Co has already introduced Cadbury biscuits to the US market

Mondelēz acquires licence to produce Cadbury-branded biscuits

Hershey Trust must have 13 board members eventually.  Five out of nine current members will step down under AG agreement..©iStock/tupungato

Mondelēz may make second Hershey bid as five Trust members to leave

Submit a comment

Your comment has been saved

Post a comment

Please note that any information that you supply is protected by our Privacy and Cookie Policy. Access to all documents and request for further information are available to all users at no costs, In order to provide you with this free service, William Reed Business Media SAS does share your information with companies that have content on this site. When you access a document or request further information from this site, your information maybe shared with the owners of that document or information.