Mondelez Reportedly Wants to Buy Hershey

Bid for Hershey Would Need Approval From Hershey Trust

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Credit: Hershey

Mondelez International Inc. is reportedly eager to buy Hershey Co., a deal that has the potential to increase the Oreo maker's focus on confections and give Hershey the infrastructure it needs to expand internationally.

Mondelez's bid for Hershey, reported Thursday by the Wall Street Journal, sent shares of Hershey soaring more than 20%. Mondelez declined to comment and Hershey did not immediately comment on the report.

Any takeover of Hershey would need a nod of approval from the Hershey Trust, which is its largest shareholder with more than 8% of the stock and major voting rights.

According to the Journal, citing one person familiar with the situation, Mondelez is pledging to rename the company Hershey, put its global chocolate headquarters in Hershey, Pa., and protect jobs following a merger.

If a deal were to proceed, it would mark the latest transformation for Mondelez. The Deerfield, Ill.-based company, formerly known as Kraft Foods Inc., bought Cadbury in 2010 and spun off its North American grocery business two years later. Under CEO Irene Rosenfeld, Mondelez has been looking for new growth opportunities after the global snacking industry failed to grow as rapidly as the company anticipated. Recent additions to the portfolio include buying Enjoy Life Foods, a company focused on allergen-free products, and introducing a new line of crackers, Good Thins.

Hershey, meanwhile, has been reformulating products including its bars and Kisses to have cleaner lists of ingredients as it tries to appeal to those people who want to feel better about what they eat. It has also expanded in more products beyond chocolate, with moves such as last year's acquistion of Krave jerky.

Hershey was the 70th largest U.S. advertiser last year, with spending down 13.8% to $637 million, while Mondelez ranked 129th with spending up 17.8% to $327.9 million, according to the Ad Age Datacenter. In 2015, Hershey spent the most on the Hershey chocolate brand, followed by Reese's and Kit Kat.

Both marketers work with a variety of agencies. Much of Hershey's creative work is done by a team from Arnold Worldwide and Havas. Mondelez has a history of working with a mix of agencies. In the past, Mondelez Chief Marketing Officer Dana Anderson has been critical of the agency of record model.

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