The stock of Hershey Co. (HSY) is up 15% on reports that snack food company Mondelez (MDLZ) has made a takeover offer for the chocolate maker.
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HSY stock is on track for its best one-day performance since June 30, 2016, when the shares rose more than 16% after the company received a $23 billion takeover bid from Mondelez, which owns Oreo cookies and Cadbury chocolate. Hershey’s board unanimously rejected that previous acquisition offer from Mondelez, saying it undervalued the company.
However, now it appears that Mondelez is once again taking a run at Hershey and trying to buy the Pennsylvania-based chocolate maker whose brands and products include Reese’s peanut butter cups, Twizzlers licorice, and Hershey Kisses.
Difficult to Buy
How much Mondelez is offering to buy Hershey this time around is not yet known. Neither company has commented publicly on the takeover reports. However, Bloomberg News is reporting that Hershey and Mondelez combined would create a company with annual sales of roughly $50 billion.
Acquiring Hershey is not easy. The company’s dual-class share structure gives holders of its Class B common stock, largely held by the Hershey Trust, 10 votes for every share that’s owned. As a result, the Hershey Trust has substantial control over the company’s future. Additionally, Pennsylvania law gives the state’s attorney general the power to intervene on any deal that takes power away from the Trust.
Analysts say the situation with HSY stock is largely why the company has remained independent since its founding in 1894. The stock of Mondelez is down 2% on news of its potential new takeover bid for Hershey. Mergers and acquisitions have been heating up in the packaged food space. Privately held M&M’s owner Mars bought Pringles maker Kellanova earlier this year for $36 billion.
HSY stock is up 10% on the year.
Is HSY Stock a Buy?
Hershey Co. stock has a consensus Hold rating among 18 Wall Street analysts. That rating is based on no Buy, 14 Hold, and four Sell recommendations issued in the last three months. The average HSY price target of $180.94 implies 0.40% downside risk from current levels.
