On Thursday, The Hershey Company’s board unanimously voted against a $23 billion worth of takeover attempt coming from snack giant Mondelez. A spokesperson for Hershey said that the offer was rejected because it left no room for further negotiations between the two food giants.
Hershey said Thursday that Mondelez International, which is the firm Kraft Foods spun off its former snack division into in 2012, offered $107 per share which is a 10 percent rise from its regular closing stock price. Reportedly, the deal features “non-monetary conditions” as well.
Mondelez, which in May cut 660 jobs in Chicago since it decided to outsource part of its operations to Mexico, pledged to keep U.S. jobs within the country and move its global HQ to Hershey, Pennsylvania.
The resulting company will reportedly be named after Hershey.
People familiar with the matter said that the two companies are still in talks. A spike in Hershey stock price seen these days may suggests that investors are confident that Mondelez could come up with a better offer.
Some analysts believe that Mondelez seeks the current merger to prevent another company from merging with it. Billionaire investor William Ackman has been pressing the company to either boost profit or give in to an acquisition offer.
However, it is not the first time a company tries to acquire Hershey’s and fails. This is because The Hershey Trust, which currently owns just 8.4 percent of the company, has 80 percent of the voting power. The trust was set in place by the company’s founder Milton S. Hershey and his wife more than a century ago.
About 14 years ago, William Wrigley Jr. Company made a $12 billion offer to buy the Pennsylvania company but it was rejected. Just the rumor of a sale sparked a national controversy. Milton Hershey School students and local residents even sought an injunction to stop the merger in court.
Cadbury Schweppes and Nestle also tried to buy Hershey. In the meantime, Mars bought Wrigley, while Kraft purchased Cadbury.
Analysts believe that Hershey trust is the largest obstacle in the face of a merger. And in the case of Mondelez history may repeat itself
On the other hand, a merger between the two companies will be mutually beneficial since Hershey’s has a large market share in the U.S. while Mondelez is a respectable confectionery maker overseas.
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