Hershey Co. (HSY) Unanimously Rejects Mondelez Bid

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Update: Hershey Co. (NYSE:HSY) has unanimously voted to reject a preliminary, non-binding indication of interest from Mondelez International Inc (NASDAQ:MDLZ). Shares were halted at 15% gains before the news was released.

HSY stock suddenly surged by about 18% in Thursday’s midday trading on news that Mondelez had submitted a bid to buy out one of the world’s most famous chocolate makers.

Hershey Co. HSY Stock logo

According to The Wall Street Journal, people familiar with the matter said that Mondelez sent a letter to Hershey proposing a buyout, but no terms were actually disclosed in the report. However, HSY had a market cap of $21 billion to start the day, and at around $115 per share after the report came out, the company had gained about $3.7 billion in market capitalization.

HSY stock has been enjoying a solid 2016 compared to most of the market, up some 9% in a fairly steady line since the February lows. However, that has come amid weakness in sales, with revenues coming up weak in its past couple of reported quarters.

Still, Mondelez would be gobbling up a corporate brand that just last year was ranked the second most powerful in the country, for the second year in a row. That’s thanks to the strength not just of its signature Hershey chocolate, but also its Reese’s, York and Twizzlers brands.

And apparently MDLZ doesn’t plan on tarnishing that brand. Per the WSJ: “Mondelez is pledging to protect jobs following a merger of the companies, locate its global chocolate headquarters in Hershey, Pa., and rename the company Hershey, according to one of the people.”

This is hardly the first time HSY has been a part of sale talks. Hershey has explored various options for selling the company over the years, including denying a Wrigley’s bid in 2002. Even earlier this month, HSY stock got a bump on rumors that it would be taken over by Swiss foods outfit Nestle SA (ADR) (OTCMKTS:NSRGY).

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Article printed from InvestorPlace Media, https://investorplace.com/2016/06/hershey-co-hsy-stock-mondelez/.

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