Mondelez Reportedly Offered To Buy Hershey

Food conglomerate Mondelez may be interested in gobbling up a sweet snack competitor: Hershey. Reportedly, the maker of OREO cookies wants to merge with the king of chocolate to create one of the world’s largest candy manufacturers.

If there is such discussion going on, any Mondelez offers would have to get support from the Hershey Trust Company, a charitable organization that controls 80% of the voting power and has shown resistance to selling in the past. In practice, if the trust had a serious interest in any deals, it would likely entertain multiple offers from various suitors.

The reported news that Mondelex made a “preliminary approach about a possible combination” was shared by people familiar with the matter who asked not to be named.

Hersey does not normally comment on rumors, and Mondelez has not confirmed that an offer has been extended. Yet, once the Mondelez-Hersey merger speculation reports emerged, the share price of the Hersey company surged higher. Meanwhile, Mondelez’s stock price dropped.

The acquisition rumor comes as Hersey continues to struggle with rising cocoa prices and consumers cutting back on nonessential and potentially unhealthy grocery items, like chocolate. In the third quarter, which ended on Sept. 29, Hersey reported net sales of $2.99 billion, falling below analysts’ expectations of $3.07 billion.

Mondelez Tried To Buy Hershey Before

Mondelez tried to make a sweet deal eight years ago when it offered to buy Hersey for $23 billion. However, Hersey hands-down rejected the deal, and the Ritz cracker-owned company gave up its ambitions shortly thereafter.

In 2002, the Hersey Trust did consider selling its majority stake to Wrigley. Yet, the potential agreement was squashed when the Pennsylvania attorney general halted the sale, stating such a deal would cause ”irreparable harm” to the candymaker’s hometown and residents.

Expanding their global snacking footprints has seemingly been on the corporate minds of other giant food companies. In August, Mars offered nearly $36 billion for Kellanova, the maker of Pringles and Cheez-It. Over the past four years, Mars has also taken control of Nature’s Bakery, Trü Frü, and British chocolate brand Hotel Chocolat.

A Mondelez-Hersey company would dominate the grocery aisles. Mondelez already owns several popular product brands such as Chips Ahoy, Wheat Thins, Toblerone, and Sour Patch Kids. In addition to its famous chocolate, Hersey also makes beloved candies like KitKat, Jolly Rancher, and Reese’s.