Hershey Media Report 8/15/16

Trade Coverage

1. A Balancing Act: 4 potential food and beverage deals on the radar

   Aug 15, 2016 | Food Dive

   By Carolyn Heneghan
   
   
   Discussion of another potential Mondelez bid in Food Dive's "A Balancing Act." Relevant portion pasted below.
2. Mondelez to Acquire Cadbury Biscuits License from Burton's Biscuit Company

   Aug 15, 2016 | Food Ingredients First

   Brief mention of the Mondelez bid for Hershey in the context of Mondelez's acquisition of Cadbury's biscuit license.

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Trade Coverage

1. A Balancing Act: 4 potential food and beverage deals on the radar

   Aug 15, 2016 | Food Dive

   By Carolyn Heneghan

   rgers and acquisitions may have slowed so far in 2016, but experts have confirmed that this doesn't necessarily signal a downturn in activity for the industry. The capital is available, interest rates are low, and multiples, while lower than recent years, are still favorable for sellers.

   It's all about who’s going to pull the trigger next as industry consolidation and interest in startups continue.

   "You're starting to see big companies making big acquisitions — lots of money and all in line with the evolving consumer trends that they need to be focused on," said Lou Biscotti, partner and head of the food and beverage practice at WeiserMazars. "I think it's very healthy for the companies, the economy and the consumer."

   With just over four months left in the year, these four combinations have hit analysts' and Food Dive's radars as potential deals for the future.

   ...

   Hershey may have quickly shut down Mondelez’s $23 billion takeover offerearlier this year, but that hasn't shut down speculation that the deal could still happen. Mondelez may return with another, potentially more attractive bid.

   Also key to the success of a future bid are changes at the Hershey Trust, including settling with the Pennsylvania attorney general last month, which will likely end in a shakeup of the trust's board. The trust controls 81% of Hershey’s voting power, so with a new board and a new offer from Mondelez — or any other buyer — a Hershey sale could have a different outcome.

   However, the trust isn’t the only party involved. The Milton Hershey School is the beneficiary of the Hershey Trust, which could argue that any decision may not be in the institution's best interest. The attorney general, who has oversight powers over the Hershey Trust, can also step in if he or she believes the deal could negatively impact the local economy.

   "It's going to be very tough for someone to acquire Hershey based upon the logistics and the ownership structure and everything surrounding the trust," said Biscotti. "That's a company that's definitely ripe for acquisition, but because of the impediments, it's going to very difficult."

   If Mondelez does return with a sweeter offer, and Hershey shareholders consider the bid to be favorable, they could take action, Biscotti said. They could bring a shareholder suit against the company, saying Hershey did not respond appropriately to the bid.

   "The amount of complexities here are just tremendous," said Biscotti. "It's a shame because with Mondelez, it would combine (two of the leading) chocolate companies in the world. The unification of the brand would be a very powerful company."

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2. Mondelez to Acquire Cadbury Biscuits License from Burton's Biscuit Company

   Aug 15, 2016 | Food Ingredients First

   Mondelez International have announced their agreement to purchase from Burton's Biscuit Company the license that enables the company to manufacture, market and sell Cadbury-branded biscuits around the world, including in the UK, France, Ireland, North America and Saudi Arabia, subject to regulatory approval.

   "Ownership of the Cadbury biscuits license offers us exciting opportunities to accelerate global growth and innovation, as we expand our leading position in biscuits, globally and in Europe," said Hubert Weber, Executive Vice President and President, Mondelez Europe. "The transaction will help us to unify and expand our global Cadbury biscuits portfolio in key markets and enable us to explore delicious new products by using the best of our chocolate and biscuit innovation platforms."

   Mondelez International and Burton's Biscuit Company have agreed that Cadbury-branded biscuits will continue to be manufactured in Burton's factories by their employees under a co-manufacturing agreement. 

   Financial details of the deal have not been disclosed, but a July news report said Mondelez had offered Burton's $259.4 million.

   Mondelez which bought Cadbury chocolate in 2010 for $19 billion, also recently offered to buy US rival Hershey, but was rebuffed.

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