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The iconic Hershey’s logo was prominently displayed in Manhattan on September 16, 2023.
Shares of Hershey experienced a significant rise, jumping as much as 15% during the trading session on Monday morning. The surge followed a report from Bloomberg indicating that Mondelez is actively pursuing another acquisition of the chocolate manufacturer.
This year, Hershey’s stock has seen an overall increase of 7%, bringing its market capitalization to approximately $40.49 billion. However, leading up to this peak, shares had dropped 6%, influenced by rising concerns regarding the adoption of GLP-1 medications and escalating cocoa prices.
In contrast, Mondelez’s shares fell by 2% in morning trading, marking a 15% decline in its stock value year-to-date, which has reduced its market capitalization to $82.22 billion.
Should Hershey’s shares maintain their upward trajectory, it could mark the most substantial gain since June 30, 2016, when the stock surged over 16% after Hershey publicly rejected a $23 billion bid from Mondelez. Mondelez, known for brands such as Oreo, Cadbury, and Honey Maid, ultimately conceded its efforts to acquire Hershey that August after the offer was rebuffed.
Founded in 1894 by Milton Hershey, the company has maintained its independence through various acquisition attempts and a strategic review conducted by its board in 2007.
The structure of Hershey’s stock is dual-class, wherein holders of Class B common stock—primarily controlled by the Hershey Trust—enjoy a significant advantage, possessing ten votes per share. This arrangement provides the Hershey Trust with considerable influence over the company’s strategic direction, as highlighted by a recent analysis from J.P. Morgan’s analyst, Ken Goldman.
Additionally, Pennsylvania’s laws empower the state’s attorney general to intervene in transactions that would diminish the trust’s authority. This protective measure came into play in 2002 when the Hershey Trust sought to sell its controlling interest to Wrigley. Public backlash resulted in intervention by the attorney general, which led to the transaction being blocked in the Dauphin County Orphans’ Court. This controversy also prompted the exit of ten members from the trust’s board.
Market dynamics are pushing consumer packaged goods companies towards mergers and acquisitions as they seek to expand their sales amid economic pressures. For instance, Mars, the owner of M&M’s, successfully acquired Pringles-maker Kellanova this past summer for a staggering $36 billion.
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