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Hershey Media Report 7/25/16
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Will Hershey (HSY) Stock be Affected by Trust's Governance Changes?
Jul 25, 2016 | The Street
By Natalie Walters
Shares of Hershey (HSY) are up by 0.61% to $110.62 in mid-morning trading on Momday, as The Hershey Trust Co. has come to an agreement with the Attorney General of Pennsylvania that analysts say could make the chocolate company easier to acquire. -
Not Likely Mondelez Will Remain 'As Is,' Susquehanna Sees 25% Upside
Jul 25, 2016 | Benzinga
By Mankiandan Raman
Susquehanna believes it's unlikely Mondelez International Inc MDLZ 0.97% will remain "as is" over the next 12 months, with either Mondelez buying Hershey Co HSY 0.59% or Mondelez itself being acquired by a larger F&B conglomerate. In both cases, the brokerage estimate the upside for minorities north of 25 percent, while upgrading the stock to Positive from Neutral with a $60 price target (up from $46). -
Buzz continues, but Mondelez stays mum on Hershey
Jul 25, 2016 | Central Penn Business Journal
By Roger DuPuis
Buzz continues to surround Mondelez International and whether the Illinois snack maker might make another pitch for The Hershey Co. Just don't look for any official confirmation. -
Hershey Trust Board Reaches Pact With Pa. Regulators
Jul 25, 2016 | The Chronicle of Philanthropy
The board of the Hershey Trust announced Friday that it has reached an unofficial agreement with the Pennsylvania attorney general's office that could head off a court battle over governance of the $12 billion charity that controls the namesake chocolate company, Reuters reports.
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Will Hershey (HSY) Stock be Affected by Trust's Governance Changes?
Jul 25, 2016 | The Street
By Natalie Walters
Shares of Hershey (HSY) are up by 0.61% to $110.62 in mid-morning trading on Momday, as The Hershey Trust Co. has come to an agreement with the Attorney General of Pennsylvania that analysts say could make the chocolate company easier to acquire.
Pennsylvania's Attorney General has been investigating The Hershey Trust Co., which owns 80% of the chocolate company's voting shares, about the misuse of funds and conflict of interest, the Wall Street Journal reports.
This past Friday the trust agreed to make "significant governance changes" that could facilitate an acquisition by Mondelez (MDLZ), the maker of Oreo cookies and Cadbury chocolates, CNBC reports.
The parties involved in the agreement are currently finalizing the terms of the changes. "We have reached and agreement in principle and are working on the final details in productive discussions with the Office of the Attorney General," trust spokesman Kent Jarrell said in a statement.
Last month, the trust rejected a $23 billion purchase from Mondelez.
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
We rate HERSHEY CO as a Buy with a ratings score of B. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.
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Not Likely Mondelez Will Remain 'As Is,' Susquehanna Sees 25% Upside
Jul 25, 2016 | Benzinga
By Mankiandan Raman
Susquehanna believes it's unlikely Mondelez International Inc MDLZ 0.97% will remain "as is" over the next 12 months, with either Mondelez buying Hershey Co HSY 0.59% or Mondelez itself being acquired by a larger F&B conglomerate.
In both cases, the brokerage estimate the upside for minorities north of 25 percent, while upgrading the stock to Positive from Neutral with a $60 price target (up from $46).
"If MDLZ is able to buy HSY (yes, turmoil at the Hershey Trust makes such an event more realistic than in the past), we estimate cost and top line synergies would create 25-30% upside for MDLZ (assuming a 20% premium to the current HSY share price)," analyst Pablo Zuanic wrote in a note.
A Mondelez-Hershey merger would result in a company with annual sales topping $36 billion. A potential combination would club Mondelez's Oreo, Cadbury, and Trident brands with Hershey's Reese's, and Kisses brands. But, earlier this month, Hershey rejected $107 per share offer from Mondelez.
However, the analyst expects radical changes at the Hershey Trust over the next 18 months, including the composition of its Board and the way the Trust operates, making a MDLZ-HSY merger less unlikely than before.
The analyst noted that the Mondelez bid for Hershey is a defensive tactic. Late Friday, Mondelez appointed a new director Charles Bunch, who spent ten years in the HJ Heinz Board before HNZ was acquired by 3G/Buffett.
In addition, Zuanic also said it's possible Mondelez may be acquired by Kraft Heinz Co KHC 0.14% amid the ongoing consolidation wave in the F&B space.
"A combination of cost cuts (do away with US DSD, consolidated the Northfield and Deerfield HQ, the overlap in the UK of Heinz/Cadbury), and asset divestitures (coffee) would make a$60 bid by KHC realistic and accretive," Zuanic highlighted.
If nothing happens in the M&A front, Zuanic expects limited downside in Mondelez shares due to cost savings targets and the current valuation discount to the group.
"On apples-to-apples valuation metrics, MDLZ trades at a 14% discount to the group. Our $60 price target assumes a 20% premium to account for M&A optionality," Zuanic added.
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Buzz continues, but Mondelez stays mum on Hershey
Jul 25, 2016 | Central Penn Business Journal
By Roger DuPuis
Buzz continues to surround Mondelez International and whether the Illinois snack maker might make another pitch for The Hershey Co.
Just don't look for any official confirmation.
According to CNBC, analyst Pablo Zuanic today upgraded his rating on Mondelez from neutral to positive, citing his belief that the company is likely either to merge with Hershey or be acquired by some other food and beverage group.
Zuanic on Friday told the Chicago Tribune that Kraft Heinz could be interested in Mondelez, which might be driving the pressure to acquire Dauphin County-based Hershey first.
Hershey's board on June 30 rejected a $23 billion purchase proposal from Mondelez, whose brands include Oreo Cookies. The company was spun off from the former Kraft Foods in 2012, before Kraft merged with H.J. Heinz last year.
Mondelez spokesman Michael Mitchell today told CPBJ he is "unable to say anything beyond" a statement he provided on July 14, in which he confirmed that the original offer had been made and indicated the company would not comment further.
"I’m not able to answer specific questions," Mitchell added.
One specific question was whether Mondelez has been working on any Hershey-related matters with Centerview Partners, an investment banking firm that previously advised Mondelez on other multibillion-dollar transactions — the firm's partners, according to its website, include former Hershey CEO Dave West.
Centerview did not respond to a request for comment.
West, who spent a decade at Hershey and had been CEO since 2007, departed in 2011 to become CEO of Del Monte Foods Co. He was replaced by John Bilbrey.
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Hershey Trust Board Reaches Pact With Pa. Regulators
Jul 25, 2016 | The Chronicle of Philanthropy
The board of the Hershey Trust announced Friday that it has reached an unofficial agreement with the Pennsylvania attorney general's office that could head off a court battle over governance of the $12 billion charity that controls the namesake chocolate company, Reuters reports.
Trustees Joseph Senser, Robert Cavanaugh, and James Nevels will resign by the end of the year, according to Reuters, which cited unnamed sources familiar with the details of the settlement. Chairwoman Velma Redmond will step down before the end of 2017, along with trustee James Mead. The deal would also set a 10-year term limit for board members, give the attorney general 30 days to object to newly named trustees, and place restrictions on board pay.
The trust, established candy magnate Milton Hershey to operate a school for disadvantaged children, has voting control of Hershey Co. It has been a lightning rod for controversy in recent years, with state regulators investigating allegations of self-dealing and questionable financial moves and attempting to mandate changes in board membership and wages. In February, the attorney general's office sent trustees a letterthreatening legal action if the organization did not agree to reforms on pay and if certain board members did not step down.
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