Mergers & Acquisitions Investors Would Love to See: Hershey (HSY) and Tootsie Roll (TR)
Buyer: Hershey Co (NYSE:HSY)
Seller: Tootsie Roll Industries, Inc. (NYSE:TR)
Hershey announced first-quarter earnings April 26 that were better than expected. Analysts called for adjusted EPS of $1.26, but they beat by 3.9% delivering $1.31 per share. Hershey expects its 2017 full-year adjusted earnings per share to be as high as $4.81, implying a 22.6 forward price-to-earnings ratio.
It wasn’t too long ago that Hershey was an M&A target, but now it should turn the tables and go on the offensive.
Tootsie Roll for the longest time was run by husband-and-wife team Melvin and Ellen Gordon. Melvin died in 2015 at 92; Ellen now runs it. She’s 86. That’s not a formula for proper succession planning.
Although Tootsie Roll has some iconic brands including its namesake, Junior Mints (made famous by a Seinfeld episode), Dubble Bubble, DOTS gumdrops and much more, the level of product innovation at the company has slowed in recent years.
Buying Tootsie Roll might not be the big splash investors are hoping for, but in the hands of a more modern company, it’s possible Tootsie Roll could once again be in the minds and stomachs of kids everywhere.