The stock of Hershey Co. (HSY) closed 11% higher on reports that snack food company Mondelez (MDLZ) is preparing a takeover offer for the chocolate maker.
Hershey stock had its best one-day performance since 2016, when the shares rose more than 16% after the company received a $23 billion U.S. takeover bid from Mondelez, which owns Oreo cookies and Cadbury chocolate.
Hershey’s board unanimously rejected that previous offer from Mondelez, saying it significantly 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 products include Reese’s peanut butter cups, Twizzlers licorice, and Hershey Kisses.
How much Mondelez is offering to buy Hershey this time around is not known. Neither company has commented publicly on the takeover reports.
Media stories say that Hershey and Mondelez combined would create a company with annual sales of about $50 billion U.S.
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 owned.
As a result, the Hershey Trust has substantial control over the company and its future.
Also, 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 Hershey stock is largely why the company has remained independent since its founding in 1894.
The stock of Hershey is now flat on the year (up 0.84%) and trading at $193.65 U.S. per share.
Mondelez stock is down 17% on the year and trading at $61.44 U.S. per share.
