Mondelez, who is responsible in making Oreo cookies and Cadbury chocolates, recently sent a letter to Hershey's proposing a tie-up. In that letter, Mondelez proposed a $23 billion bid for Hershey Co. to create a partnership between both the world's largest candy making companies during a time when their companies' sales are both under pressure.
The billion dollar offer would enable Mondelez' plan to expand in the United States and become the world's largest confectioner. However, Hershey snubbed their offer. Hershey is allegedly reported to have mishandled a $12 billion charitable contribution over a century ago by the company's founder.
Hershey's market ranking is at $107 per share in cash and stock. For investors, this means it is time to expect a new offer, according to Reuters.
If the two sweet companies were to merge then they would make the chocolate business in the United States stronger than ever. These two companies have the top five candies in the whole world and Mondelez is desperate to expand its global footprint.
It was indicated that if the merger happened, Mondelez would still allow Hershey to keep its name and currently staffed employees. This kind of assurance comes with the plans in overlapping their businesses. Be that as it may, Hershey still rejected their financial suitor. It was also included in the proposition that Mondelez would control the production and distribution of its Cadbury brand in the United States. Hershey currently holds the license to produce, paying royalties to Mondelez. In addition, Mondelez would gain production and distribution rights for Kit Kat.
"The board of directors of the company unanimously rejected the indication of interest and determined that it provided no basis for further discussion between Mondelez and the company," a spokesperson from Hershey said in a statement. This is not the first time Hershey has had takeover courtships and analysts are skeptical of takeover bids.