Cadbury owner Mondelez International is exploring a potential blockbuster takeover of rival chocolate maker Hershey in a bid to create one of the largest snacking groups in the world.
Shares of Hershey, which has a market cap of almost $40bn, shot up by 11% on the New York exchange, while Mondelez, which is worth more than $80bn, fell 2.2% following reports of a possible deal by Bloomberg.
It is understood Mondelez has made a preliminary approach, and the process remains in the early stages, with no certainty of a deal happening. Any offer would also need the approval of the Hershey Trust Company, which is a charitable trust that holds voting control over the business.
Hershey rejected a previous $23bn approach by Mondelez in 2016.
Neither publicly listed firm has responded to the media speculation with an official statement.
If a deal was successful, it would create a group with combined global revenues of around $50bn, rivalling newly enlarged Mars followings its takeover of Kellanova earlier in the year.
Bernstein analyst Alexia Howard speculated that a deal could largely be about Hershey’s Reese’s brand and expanding Mondelez’s presence in the US confectionery market.
She remained sceptical that a deal would be struck but added “it could be more plausible today than it was in 2016, given the structural challenges facing Hershey in the US”. “The growth of Reese’s over the past decade suggests this brand could be very successful in international markets, where Mondelez is already established.”
AJ Bell head of financial analysis Danni Hewson said the cost cutting opportunities of a tie-up were “pretty evident”.
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