If successful, the deal would create one of the largest confectionery companies in the world, merging two industry giants with a combined market value of nearly $120bn. It would eclipse Mars’ $36bn acquisition of Kellanova earlier this year, marking the biggest transaction in the sector to date.
According to Bloomberg News, Mondelēz International has made a preliminary approach to Hershey. However, discussions are still in the early stages, with no certainty a deal will come to fruition.
A bold move by Mondelez
This isn’t Mondelēz’s first attempt to bring Hershey into its fold. In 2016, the Chicago-based snack titan offered $23bn to acquire Hershey, which was rejected by the company’s board. A significant hurdle then (and now) is the Hershey Trust Company. The Trust controls 80% of Hershey’s voting power and plays a pivotal role in safeguarding the company’s legacy and supporting charitable causes. Its consent is crucial for any sale, adding a layer of complexity to the negotiations.
The timing of the potential acquisition reflects broader pressures in the confectionery industry. Rising costs for cocoa, sugar and other ingredients have driven up retail prices and strained profit margins. Hershey has struggled this year, slashing its sales outlook amid cautious consumer spending. For Mondelēz – which is valued at $84bn – the bolt-on would bolster its position in the lucrative US chocolate market, where Hershey holds a commanding share.
Regulatory and consumer scrutiny
However, any Mondelēz-Hershey merger would face scrutiny beyond the Hershey Trust. Strict regulatory approvals would be required, given the deal’s potential to reshape the competitive landscape in the confectionery industry. Furthermore, Mondelēz’s track record with acquisitions – particularly its 2010 takeover of Cadbury – has left some consumers wary. Critics of the Cadbury deal point to recipe changes, product shrinkage and job losses as evidence of what they described as a ‘betrayal’ of the brand’s heritage.
Both Mondelēz and Hershey have so far declined to comment on the speculation. Hershey shares, which had slipped 6% earlier this year amid rising costs and consumer belt-tightening, have rebounded sharply following the news (soaring by 19%), while Mondelēz’s shares dipped by 4%, reflecting investor caution about the hurdles ahead.
If the deal goes through, it will not only create a snack and chocolate behemoth but also signals a significant shift in the global confectionery landscape.
