DEERFIELD, Ill. -- Mondelēz International Inc. is dropping its pursuit of a merger with The Hershey Co., the company has announced.
"Our proposal to acquire Hershey reflected our conviction that combining our two iconic American companies would create an industry leader with global scale in snacking and confectionery and a strong portfolio of complementary brands. Following additional discussions, and taking into account recent shareholder developments at Hershey, we determined that there is no actionable path forward toward an agreement," said chairman and CEO Irene Rosenfeld.
"While we are disappointed in this outcome, we remain disciplined in our approach to creating value, including through acquisitions, and confident that our advantaged platform positions us well for top-tier performance over the long term," she said.
It was first reported June 30 that Mondelez made an approximately $23 billion offer for Hershey, which was quickly rejected. The offer was a mix of cash and stock consideration, totaling $107 a share of Hershey common stock.
On Monday, Hershey stock was down 9.8% in after-hours trading following the announcement from Mondelez, at less than $100, after closing at $111.67.
The Wall Street Journal reported that Hershey also indicated that the trust that controls the company would need to complete a reconstitution before there could be a deal -- something unlikely to happen until next year. The trust has a roughly 30% stake in the company and 81% of its voting power.
The trust has been under scrutiny by Pennsylvania’s attorney general, which has threatened to take the trustees to court if they don’t make governance reforms at the trust by the end of the month, according to The Journal. The Mondelez bid thrust the trust into the limelight as it has been dealing with state regulators. Also, the trust could lose three longstanding board members, after losing four members since December, including one in late August.
A spokesman for the trust, one of the nation’s richest charities, said the board is in talks with the attorney general’s office and hopes to reach a resolution.
Deerfield, Ill.-based Mondelēz International is a global snacking company with 2015 net revenues of approximately $30 billion. It is a world leader in biscuits, chocolate, gum, candy and powdered beverages, with billion-dollar brands such as Oreo, LU and Nabisco biscuits; Cadbury, Cadbury Dairy Milk and Milka chocolate; and Trident gum. In 2012, Kraft Foods Inc. renamed itself Mondelēz after spinning off its North American grocery business.
The Hershey Co., based in Hershey, Pa., is a global confectionery company with more than 80 brands that drive more than $7.4 billion in annual revenues, including Hershey’s, Reese’s, Hershey’s Kisses, Jolly Rancher, Ice Breakers and Brookside, as well as SoFit.
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