Hershey has roundly rejected Mondelēz International’s $23 billion takeover bid

Image: AP Photo/Charlie Riedel
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The Hershey Company has rejected an offer by snack-food titan Mondelēz International, resisting a deal that would bring under one roof some of the world’s best-known varieties of cookies and sweets.

The Hershey, Pennsylvania-based chocolate maker didn’t explain its reasoning. Its brief statement on the matter suggests the company is not just playing coy in the hopes of a richer offer.

The Company’s Board of Directors, after receiving input from the Company’s management and its outside financial and legal advisors, carefully evaluated the indication of interest. Following this review, the Board of Directors of the Company unanimously rejected the indication of interest and determined that it provided no basis for further discussion between Mondelēz and the Company.

One possible reason for the rejection is the influence of Hershey’s largest shareholder, the Hershey Trust Co. As the Wall Street Journal notes, this trust, “set up by chocolate icon Milton Hershey back in 1905, controls an approximately $12 billion endowment for the Milton Hershey School, which runs a school in the town for underprivileged children, and related entities. The trust’s mandate extends beyond maximizing shareholder value.”

And it has a long history of rejecting takeover bids, including one from Wrigley more than a decade ago, as well as a joint big from Nestlé and Cadbury Schweppes.

Mondelēz, a Kraft Foods spinoff based near Chicago, might have known what it was up against in trying to secure a sale agreement from Hershey. Cadbury is now part of Mondelēz, which makes popular snack foods including Oreo cookies, Ritz crackers, and Toblerone chocolate.

A deal with Nestlé, the world’s largest food company by revenue, seems even less likely, as it wouldn’t align with Nestlé’s push into nutrition and health-science products, said Euromonitor food analyst Lianne van den Bos.