Mondelez threatens Hershey's heritage in shocking takeover bid

In the United States, Mondelez International is reportedly pursuing a takeover of Hershey, an iconic chocolate maker known for its Kisses and Reese's Peanut Butter Cups. This potential acquisition could result in the formation of a $50 billion snack powerhouse. The interest follows a previous attempt in 2016 when Mondelez made a $23 billion bid that was rejected. With changing consumer habits and sluggish growth in the packaged-food industry, consolidation efforts are intensifying among food giants. Hershey is currently valued at around $35 billion, while Mondelez's valuation stands at approximately $84 billion. The backdrop of this attempt by Mondelez is marked by challenges in the food industry, with numerous companies facing rising cocoa and sugar costs and shifting consumer preferences. Hershey's shares have seen a decline of 6 percent this year, while the company's CEO Michele Buck has revised the sales outlook down, citing the financial constraints faced by cash-strapped consumers. The urgency of a merger is underscored by a competitive landscape, particularly after Mars acquired Kellanova for $36 billion earlier this year. This environment drives both companies to explore opportunities more aggressively. However, any deal is expected to encounter substantial hurdles, particularly because of the Hershey Trust, which controls 80 percent of Hershey's voting power. While shares for Hershey rose by 17 percent following the announcement of Mondelez's interest, Mondelez's shares experienced a 4 percent drop. The contrast in market reactions emphasizes both the potential opportunities and risks of such a merger. The complicated history of Mondelez, a spin-off of Kraft Foods which famously acquired Cadbury in 2010, also looms over this endeavor. Cadbury's fans were outraged by the changes made post-acquisition, leading to perceptions that the brand had 'betrayed its heritage.' This historical context raises questions about how the market and consumers might respond to another significant acquisition in the sector.