Exane would ‘be surprised’ to see a Hershey-Mondelez deal go through

Following Bloomberg’s report that Mondelez (MDLZ) approached Hershey (HSY) about a takeover, Exane BNP Paribas analyst Max Gumport said the firm would “be surprised to see this deal go through” given its belief that the Hershey Trust is more likely than not to reject such an offer. Additionally, a “transformational” deal like this is outside of Mondelez’s “core M&A strategy,” contends the analyst, who thinks a “meaningful premium” to Hershey’s current stock price would be necessary to justify a sale. For Mondelez, the firm calls it an “odd time” to consider such a deal given the “challenged environment for the packaged food industry in the US,” particularly for snacking, and the fact that cocoa prices that are near “record highs.” The firm has a Neutral rating on Hershey shares and an Outperform on Mondelez.