Mondelez International (Nasdaq: MDLZ) has agreed to acquire Grupo Bimbo’s confectionery business, Ricolino, for $1.3 billion. The company seeks to fund the deal through issuance of debt and cash in hand. Also, the transaction is expected to close in the late third quarter or early fourth quarter of 2022.
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Mondelez manufactures food products like biscuits and chocolates under some of the most famous names such as Oreo, Milka, and Cadbury. Whereas, Ricolino sells under names such as Vero, La Corona and Coronado and makes confectionery products like lollipops, marshmallows, chocolates and gummies.
With this deal, Mondelez will be able to strengthen its presence in Mexico’s “high-priority” market by doubling the size of its business and expanding presence in snacking. Also, the company will be able to meet the growing demand for its products by having access to Ricolino’s four manufacturing facilities.
The Chairman and CEO of Mondelez, Dirk Van de Put, said, “This acquisition will provide a step change for our business in Mexico, an important growth market for us, more than tripling our routes to market and growing our position in core snacking categories.”
Stock Rating
Recently, Morgan Stanley analyst Pamela Kaufman maintained a Buy rating on Mondelez with a price target of $70 (6.4% upside potential from current levels).
Overall, the Street has a bullish outlook on the stock with a Strong Buy consensus rating based on 13 unanimous Buys. Mondelez’s average price target of $72.92 implies upside potential of about 10.9% from current levels.
Investors’ Stance
TipRanks’ Stock Investors tool shows that retail investors currently have a Very Positive stance on Mondelez, as 8.8% of investors on TipRanks increased their exposure to MDLZ stock over the past 30 days.
Takeaway
Mondelez has been involved in several key acquisitions over the past year to expand its business and meet customers’ demands. The recent deal is expected to support Mondelez’s aim of strengthening its business. Further, the bullishness of bloggers and investors makes MDLZ an attractive option.
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