Mondelēz reportedly mulling acquisition offer for Hershey in potential US$50B merger

Mondelēz International has reportedly approached US chocolate giant Hershey with a tentative acquisition proposal, in a deal that would create a food conglomerate with a combined sales value of almost US$50 billion. Neither company has yet confirmed the rumors. 

People familiar with the matter told Bloomberg on Monday that a preliminary approach had been made. In 2016, Mondelēz made a failed bid to buy Hershey for US$23 billion — an offer the chocolate maker snubbed as too little. 

Following the rumors, Hershey’s share price rose as much as 19%, marking its biggest intraday gain in more than eight years. This gave the company a market capitalization of US$39 billion. Mondelēz fell 2.3%, giving it a capitalization of roughly US$82 billion.

If a deal is made, it would be the year’s biggest merger, following Mars’ acquisition of Kellanova for almost US$36 billion in August. 

The news comes at a time when cocoa prices have been rising sharply. In Q1 of 2024, prices almost tripled to US$12,000 per ton, before declining shortly after. By May 2024, the consumer price of cocoa and powdered chocolate in the EU was 6.3% higher than in May 2023, according to Eurostat. 

The consumer price of cocoa was already on the rise since early 2022, and saw an acceleration in Q4 2022, with annual inflation rates exceeding 10%. The increase peaked in May 2023, with an inflation rate of 18.5% relative to May 2022. Prices have been rising more slowly since then, but the inflation rate did not fall below 10% until February 2024. 

Sugar prices have also risen, with an almost 40% increase last year. Adverse weather conditions have restricted global production capacity. 

This week, investment bank TD Cowen announced the price target on Mondelēz share earnings would be cut. 

We have contacted Mondelēz and Hershey for comment.