TD ups Hershey target, assumes $242 per share takeover price

TD Cowen raised the firm’s price target on Hershey (HSY) to $190 from $166 and keeps a Hold rating on the shares following Bloomberg’s report that Mondelez (MDLZ) approached the company about a takeover. The stock in afternoon trading is up 13% to $197.34. Acquiring Hershey “would create opportunities and address many issues for Mondelez all at once,” the analyst tells investors in a research note. The firm says the deal would add two “world-class brands” to Mondelez’s snack portfolio. TD upped Hershey’s price target to reflect a higher probability “of what is admittedly a bifurcated outcome” regarding the potential takeover. In its sensitivity analysis, TD assumes a 38% equity premium for Hershey to $242 per share, cost synergies of 7% of sales, and financing of 50% debt and 50% equity. Changing control of a brand like Hershey would require a significant premium, TD says.