Mondelez reported to be considering a major takeover of Hershey

The global Mondelez International group is said to be eyeing a takeover move for rival US confectionery giant, Hershey, according to industry sources, writes Neill Barston.

Reuters agency reported the initial news this earlier this week, which comes amid a period of notable market uncertainty in which sector consolidation continues to play a factor.

Should a formal bid for Hershey eventually be tabled, it would make Mondelez’s already existing major market share of the snacks sector, an even larger multi-billion entity across the complete confectionery space. The deal is believed to have been previously considered nearly a decade ago, but ultimately was not taken forward at that time.

Carl Quash III, Industry Manager of Food and Nutrition at Euromonitor International believed a potential deal could hold strong mutual value.

He said: ” The news of a speculated Hershey acquisition follows a string of other M&A news we have seen and heard about this year – from Unilever’s planned ice cream separation, PepsiCo’s acquisition of Siete brand, the Mars and Kellanova megamerger and more.

“What we’re really seeing is the response of manufacturers to a slowdown in growth and preparation for future uncertainties.
In the case of a potential buyout between Hershey and Mondelez, there is the potential for greater business coverage and resilience from a brand, geographical, as well as categorical perspective.

There is also possibility for an alternative scenario that doesn’t involve an M&A. Firstly, the potential of a Hershey and Mondelez combined business would catalyse Hershey’s influence and growth outside of the US while also increasing the company’s consumer loyalty by obtaining a greater mix of power brands.

Mondelez holds a more balanced global sales coverage across developed and developing markets whereas more than 90% of Hershey’s snack business is reliant upon the USA. Furthermore, Hershey’s billion-dollar brands account for the overwhelming majority of the company’s sales (i.e. Reese’s, Hershey’s variants, and Skinny Pop) whereas Mondelez holds nearly a dozen billion- dollar brands which source growth from a variety of markets and categories such as Oreo, Cadbury and Milka.”

He added that in his view any merge would result in significant changes to the confectionery sector, and seen greater dominance of chocolate and sugar confectionery, as well as gum across the broader market.

Confectionery Production has approached Mondelez for comment.

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