Hershey's main controlling owner has rejected Mondelez International's preliminary takeover offer, terming it as too low, reports stated on Wednesday (11), citing people familiar with the matter.
The deal, which could’ve created one of the world’s largest confectioners, wasn’t realistic for the Hershey Company as they declared it was “too low to entertain.”
Bloomberg reported earlier this week that Mondelez was exploring the acquisition of chocolate maker Hershey, in what could have created one of the world's largest confectioners. The Hershey Trust Company's approval is key in any takeover deal, given its voting control of the chocolate maker.
It is not the first that Mondelez has sought to acquire Hershey, with the brand rejecting a £18bn takeover bid in 2016, labelling the offer as too low. Hershey and Mondelez did not immediately respond to Reuters' requests for comment.
Any deal would need the approval of the Hershey Trust Company, a charitable trust, that maintains voting control over the business.
Buzz is that the trust may be open to other offers even as the Mondelez deal loses steam, with PepsiCo and Nestle touted as possible suitors.
The surging cost of cocoa has hurt Hershey and forced it to raise prices, turning off some inflation-pinched shoppers. At the same time, consumers are moving toward healthier foods, a trend that is accelerating with the popularity of weight-loss shots.
Last month, Hershey trimmed its annual revenue and profit forecasts after its quarterly revenue dipped due to weak demand. In contrast, Mondelez reported a near 2 per cent rise in sales in the latest quarter.
Earlier in the day, the Chicago company said that given current market conditions, stock buybacks remain a key priority, and that it is committed to an acquisition strategy focused on "bolt-on deals" similar to its recent acquisitions of Chipita, Clif and Ricolino.