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Hershey Media Report 9/2/16
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Deal of the Week: Hershey Still Standing as Mondelez Deal Melts Away (Video)
Sep 1, 2016 | Bloomberg
By Ed Hammond
Hershey’s has once again managed to fend off the takeover efforts of a rival. On Monday, Mondelez, the snack company, said it had abandoned its pursuit of Hershey’s, becoming the fourth company to have tried - and failed - to buy the chocolate-maker. Here, Ed Hammond and Craig Giammona discuss what makes Hershey’s such a tough takeover target and look at the broader trends in food M&A. -
Hershey Shares Plunge Over 11% after Mondelez Says It Won't Pursue Takeover
Sep 1, 2016 | The Lake Andes Wave
By Nellie Chapman
However, Bilbrey responded that the Hershey's controlling shareholder - the Hershey Trust - would not be able to consider the offer until next year as it was being reconstituted. -
Mondelez abandons Hershey takeover bid after talks fail
Sep 2, 2016 | The Village Sun Times
By Max Garcia
Last week Hershey declined the latest Mondelez bid its second in the past three months. "Following additional discussions, and taking into account recent shareholder developments at Hershey, we determined that there is no actionable path forward toward an agreement", she explained. -
High Profile Active Buzzers: The Hershey Company (NYSE:HSY), Sealed Air Corporation (NYSE:SEE)
Sep 1, 2016 | Street Wise Report
By Blake Escott
Brief mention of the rejected bid from Mondelez. Relevant portion pasted below. -
OIL, ISM MISS SEND DOW JONES INDUSTRIAL AVERAGE SLIDING
Sep 1, 2016 | Schaeffer's Investment Research
Brief mention of the rejected bid from Mondelez. Relevant portion pasted below. -
Hershey shares dive after Mondelez calls off deal talks
Sep 1, 2016 | Consumnes Connection
By Zachary Reyes
The $12 billion trust controls 81% of voting shares in Hershey, which added uncertainty to the situation. Mondelez International Inc.'s latest bid was valued at $25 billion, its second offer since last June. -
Business this week
Sep 1, 2016 | The Economist
Brief mention of the rejected bid from Mondelez in The Economist's "Business this week." Relevant portion pasted below. -
Goodbye Mondelēz, Hello Good Old Hershey
Sep 1, 2016 | Seeking Alpha
By Joseph Harry
I was happy when Mondelēz (NASDAQ:MDLZ) dropped its pursuit of Hershey (NYSE:HSY), despite the steep sell-off after the announcement. It seems like there's two major camps: those who liked the deal and wanted the quick share price appreciation, and those who wanted to keep their HSY shares away from the clutches of the arguably inferior management of Mondelēz. I fall in the latter camp, and think Hershey is truly one of the few "buy-and-hold forever" companies on the market. -
Mondelez says it ended talks to buy Hershey
Sep 1, 2016 | Nano News
By James Pearson
The sharp drop in Hershey shares represents the largest one-day skid for the chocolate maker since 2002. Mondelez International, the owner of snack brands like Oreo and Nabisco, said Monday that it was no longer seeking to combine with Hershey after conversations between the two companies fell flat. -
Markets Right Now: US markets end lower in quiet trading
Sep 2, 2016 | Junior College
By Adam Carter
Shares of Mondelez (MDLZ) advanced on heavy trading volume on Tuesday after the company ended discussions late yesterday to combine with Hershey, PA-based snack confectionery manufacturer Hershey (HSY). Mondelez, meanwhile, rose 3.6% after closing at $43.04. -
Mondelez Abandons Hershey Takeover Bid
Sep 2, 2016 | Junior College
By Adam Carter
The takeover would have combined Hershey's Reese's, Kisses, and namesake chocolates with Mondelez's Oreo, Cadbury brands, and Nabisco, creating a global snacking giant with $37 billion in annual sales. -
Mondelez backs off from Hershey pursuit
Sep 2, 2016 | Senegal Actu
By Mercedes Poole
So what: Hershey received a $23 billion takeover bid from Mondelez in late June, a development that sent shares of the iconic chocolate company soaring.
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Deal of the Week: Hershey Still Standing as Mondelez Deal Melts Away (Video)
Sep 1, 2016 | Bloomberg
By Ed Hammond
Hershey’s has once again managed to fend off the takeover efforts of a rival. On Monday, Mondelez, the snack company, said it had abandoned its pursuit of Hershey’s, becoming the fourth company to have tried - and failed - to buy the chocolate-maker. Here, Ed Hammond and Craig Giammona discuss what makes Hershey’s such a tough takeover target and look at the broader trends in food M&A.
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Hershey Shares Plunge Over 11% after Mondelez Says It Won't Pursue Takeover
Sep 1, 2016 | The Lake Andes Wave
By Nellie Chapman
However, Bilbrey responded that the Hershey's controlling shareholder - the Hershey Trust - would not be able to consider the offer until next year as it was being reconstituted.
Illinois-based Mondelez, maker of Oreo cookies and numerous other snack other brands, initially made a $23 billion pitch, which was rejected by Hershey's board on June 30.
Some Mondelez shareholders and industry analysts had questioned the takeover offer, which would have been valued at upward of $25 billion, arguing that Hershey is largely concentrated in the US and the candy aisle, both of which have seen slowing sales growth in recent years.
Last week Hershey declined the latest Mondelez bid its second in the past three months.
Hershey's growth has slowed over the past two years. Hershey on the other hand, appeared too demanding withreports crossing wires that it demanded an offer no less than $125 apiece before it could begin merger talks.
Mondelez International said Monday it has ended efforts to buy The Hershey Co. If Mondelez had done that, and paid for half its offer in cash, a deal wouldn't add much to earnings before accounting for synergies, according to data compiled by Bloomberg. The trust also has stood between Hershey and a deal with Cadbury, which was ultimately acquired by Kraft Foods. According to the WSJ, a misalignment in valuation considerations (HSY wanting ≥ $125/share) and further board turnover at The Hershey Trust Co. were complicating factors in reaching an agreement.
Global stock markets mostly rose on Tuesday as investors weighed the possibility and timing of another US interest rate increase this year.
Shares of Hershey tumbled nearly 12 percent in after-hours trading, while those of Mondelez gained about 3 percent.
Shares of Mondelez, meanwhile, gained almost 4 percent on the day.
After closing regular trade up 0.7% prior to the announcement, Hershey shares tumbled 11.4% in after-hours trade. A merger with Hershey would have created the world's largest candy company and protected it from being targeted by competitors. "While we are disappointed in this outcome, we remain disciplined in our approach to creating value, including through acquisitions".
Another wrinkle: The Pennsylvania attorney general has the right to review a deal to acquire Hershey.
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Mondelez abandons Hershey takeover bid after talks fail
Sep 2, 2016 | The Village Sun Times
By Max Garcia
Last week Hershey declined the latest Mondelez bid its second in the past three months. "Following additional discussions, and taking into account recent shareholder developments at Hershey, we determined that there is no actionable path forward toward an agreement", she explained.
In other company news, Hershey fell 12.02 dollars (£9.17), or 11%, to 99.65 dollars (£76) after snack food company Mondelez International said it was walking away from its proposal to buy Hershey for roughly 25 billion dollars (£19).
Hershey slumped 11 per cent and Mondelez rose 4 per cent in early trading Tuesday after Mondelez, which makes Oreo cookies and other products, said it would no longer pursue a combination with Hershey. Rather, we've long thought that the sizable hurdle to a deal was that Hershey is a controlled company, with more than 80% of the voting power held by the Milton Hershey School Trust, which depends on Hershey's dividends to fund its operations.
MainFirst analyst Alain Oberhuber believed there were two sticking points for the deal: price and the reorganisation of the Hershey board.
Hershey Trust Co.is in the midst of reconstitution of its board of directors after they were alleged for profligacy, disregard for term limits, and self-dealing.
In response, Hershey said to start discussions the price would have to be at least $125 per share. F
rom Bill Ackman ( Trades, Portfolio )'s mid-year -...-6 letter.About GuruFocus: GuruFocus.com tracks the stocks picks and portfolio holdings of the world's best investors.
Last June, Mondelez proposed to buy Hershey for about $23 billion or $107 per share, an offer Hershey rejected.
Pennsylvania state senator John Rafferty, the Republican candidate for attorney general, has said he does not think diversification for a charitable trust is always necessary, and has expressed "serious reservations" about a potential sale to Mondelez.
A Hershey's chocolate bar is shown in this photo illustration in Encinitas, California, U.S. January 29, 2015.
Last year, Mondelez came under fire after it was revealed that it had paid no United Kingdom corporation tax in 2014.
While Hershey shares are lower on the news, the stock is still up from just prior to the original acquisition announcement.
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High Profile Active Buzzers: The Hershey Company (NYSE:HSY), Sealed Air Corporation (NYSE:SEE)
Sep 1, 2016 | Street Wise Report
By Blake Escott
The Hershey Company (NYSE:HSY) persists its position slightly strong in context of buying side, while shares price raised 0.24% during latest trading session as, Mondelez International’s announcement that it has ended discussions with Hershey regarding a possible combination is likely to cause a negative reaction to Hershey’s stock. However, in our experience, broken accords like these often lead to material changes at the intended target and sometimes accelerated shareholder value creation.
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OIL, ISM MISS SEND DOW JONES INDUSTRIAL AVERAGE SLIDING
Sep 1, 2016 | Schaeffer's Investment Research
Among the stocks with unusual options volume at midday is Mondelez International Inc (NASDAQ:MDLZ), which is trading 2.2% lower at $44.02 today, slipping for the first time since announcing earlier this week the company will end its pursuit of Hershey Co (NYSE:HSY). MDLZ calls are crossing the tape at three times their usual intraday rate, outpacing puts 3-to-1. Most active thus far is the out-of-the-money December 55 call, where it looks like speculators are purchasing new positions. With short interest accounting for less than 1% of MDLZ's total float, it's reasonable to believe these are true bulls, expecting the stock to rally through the $55 level -- in record-high territory -- before the option's expiration, on Friday, December 16.
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Hershey shares dive after Mondelez calls off deal talks
Sep 1, 2016 | Consumnes Connection
By Zachary Reyes
The $12 billion trust controls 81% of voting shares in Hershey, which added uncertainty to the situation.
Mondelez International Inc.'s latest bid was valued at $25 billion, its second offer since last June.
The owner of Cadbury chocolate has lost its interest in buying USA confectionery company Hershey, after having two bids rebuffed in recent months. With weak stock performance and meek historical growth numbers, Hershey couldn't have contributed enough synergies to justify the multi-billion dollar deal price. Hershey said the offer would have to be $125 per share to begin serious talks.
Since its initial interest surfaced two months ago, Mondelez disclosed on Monday that it is dropping its pursuit of Hershey.
Hershey's shares fell almost 12 percent in after-hours trading, hitting $98.06. In 2002, the trust put Hershey up for sale, citing a need to diversify its holdings.
Mondelez - which bought Cadbury's in 2010 when it was known as Kraft Foods - had struggled to buy Hershey because of its corporate structure.
Mondelez, meanwhile, gained about 3 percent, the New York Times noted. That would have been nearly 7.5% more than the company's initial stock-and-cash offer.
Mondelez CEO Irene Rosenfeld said in a statement Monday that after additional discussions, the company decided "there is no actionable path forward toward an agreement".
In addition, as part of the agreement, the charity is expected to appoint nine new board members, bringing the board to 13 members. "While we are disappointed in this outcome, we remain disciplined in our approach to creating value, including through acquisitions".
What does this mean for Hershey shares?
A deal between the two companies would have created the world's biggest maker of confectionary. Under that deal, five current members, including Chairwoman Velma Redmond, will retire through December 31, 2017.
Ackman, in fact, thought the whole Hershey deal was a distraction although Rosenfeld defended it through a spokesman as "motivated by our belief that a combination offered a unique opportunity to enhance the prospects of both companies", Gasparro reports.
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Sep 1, 2016 | The Economist
Not so sweet
Mondelez, one of the two companies to emerge from the splitting of Kraft Foods in 2012, said it could not reach an agreement with the owners of Hershey over its $23 billion takeover offer and had therefore dropped its bid for the confectioner.
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Goodbye Mondelēz, Hello Good Old Hershey
Sep 1, 2016 | Seeking Alpha
By Joseph Harry
I was happy when Mondelēz (NASDAQ:MDLZ) dropped its pursuit of Hershey (NYSE:HSY), despite the steep sell-off after the announcement.
It seems like there's two major camps: those who liked the deal and wanted the quick share price appreciation, and those who wanted to keep their HSY shares away from the clutches of the arguably inferior management ofMondelēz. I fall in the latter camp, and think Hershey is truly one of the few "buy-and-hold forever" companies on the market.
Hershey's wide moat: Made of chocolate, illustrated in numbers
I'd like to begin by taking the whole capital structure into consideration to evaluate management's capital allocation skills. I pulled (GAAP) numbers from the firm's financial statements to build the below return on invested capital model in Excel.
I'd say that Hershey earns wide economic profits, with ROIC exceeding its weighted average cost of capital, or WACC, by a wide mark. It carries a relatively high debt-to-equity ratio, but this isn't out of the ordinary for companies in the consumer staples segment that spit out high, fairly predictable cash flows.
Now I'd like to move on to just the equity slice of the pie, by constructing a five part DuPont analysis to break return on equity down into pieces.
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Mondelez says it ended talks to buy Hershey
Sep 1, 2016 | Nano News
By James Pearson
The sharp drop in Hershey shares represents the largest one-day skid for the chocolate maker since 2002.
Mondelez International, the owner of snack brands like Oreo and Nabisco, said Monday that it was no longer seeking to combine with Hershey after conversations between the two companies fell flat.
Buying Hershey would have given Mondelez control over the production and distribution of Cadbury chocolates in the U.S., which now Hershey holds the licence to produce, paying royalties to Mondelez.
At the time, the Hershey board insisted the offer did not warrant further discussions with Mondelez.
Now that a deal with Hershey Co.is off the table, snack giant Mondelez International Inc.is going about its plan to dramatically cut costs and become more profitable without the help of a big acquisition.
Shares of the Hershey Co. tumbled more than 11% in after-hours trading August 29 in response to news Mondelez had moved on from pursuing a deal. Mondelez reached 15% in the most recent quarter.
So much for that much-hyped chocolate marriage between Hershey and Cadbury. A deal would require the approval of the Hershey Trust, its largest shareholder, which has opposed a sale in the past. Global stock markets mostly rose on Tuesday, Aug. 30, 2016, as investors weighed the possibility and timing of another US interest rate increase this year.
France’s CAC 40 added 0.7 percent to 4,455 and Germany’s DAX rose 0.9 percent to 10,640. While a combination with Mondelez would have created a snack and chocolate behemoth, Hershey will continue to go at it alone. Hershey shares soared to record highs in June after The Wall Street Journal reported that Mondelez offered $107 a share for the candy company. Hershey was looking for a bid of at least $125 (£96) a share. Hershey didn’t want to even consider a transaction with Mondelez until the charity’s board is reconstituted next year, another person familiar with the situation said. Under that deal, five current members, including Chairwoman Velma Redmond, will retire through December 31, 2017.
A source told the Reuters agency that Rosenfeld approached Hershey chief executive John Bilbrey last week and offered $115 per share for the company.
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Markets Right Now: US markets end lower in quiet trading
Sep 2, 2016 | Junior College
By Adam Carter
Shares of Mondelez (MDLZ) advanced on heavy trading volume on Tuesday after the company ended discussions late yesterday to combine with Hershey, PA-based snack confectionery manufacturer Hershey(HSY). Mondelez, meanwhile, rose 3.6% after closing at $43.04.
The Hershey Trust controls almost 81% of the shareholder votes at Hershey and is amidst the overhauling of its board following a state regulators investigation and investors wonder if Mondelez could win approval by striking at a time of much uncertainty. (HSY) after the Pennsylvania chocolate maker spurned a newtakeover offer and indicated it would be hard to strike a deal before next year.
A source told the Reuters agency that Rosenfeld approached Hershey chief executive John Bilbrey last week and offered $115 per share for the company.
Mondelez International Inc.'s latest bid was valued at $25 billion, its second offer since last June.
The changes at Hershey don't come into effect until next year and its shareholders are said to have been averse to any transactions before then. "Hershey would only entertain a starting bid of $125 a share".
Had the deal gone through the new entity would have represented a global powerhouse with some of the world's best-known chocolates and snacks in its products range including Cadbury and Oreo.
Hershey said in July it had rejected a $23 billion takeover bid by Mondelez. The acquisition would have created synergies and helped Hershey expand its reach overseas, while boosting Mondelez sales in the US. She also added that the company is well-positioned in the industry and will continue to add value for its shareholders.
Democrat candidate Josh Shapiro has said he will "vigorously protect Hershey's continued success in Pennsylvania" and protect it from "multi-national corporations and Wall Street investors willing to destroy Pennsylvania jobs for their own profit". With weak stock performance and meek historical growth numbers,Hershey couldn't have contributed enough synergies to justify the multi-billion dollar deal price. Mondelez, however, did not mention any potential upcoming proposals for acquisition.
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Mondelez Abandons Hershey Takeover Bid
Sep 2, 2016 | Junior College
By Adam Carter
The takeover would have combined Hershey's Reese's, Kisses, and namesake chocolates with Mondelez's Oreo, Cadbury brands, and Nabisco, creating a global snacking giant with $37 billion in annual sales.
DEAL'S OFF: Hershey fell $12.36, or 11 percent, to $99.30 after snack food company Mondelez International said it was walking away from its proposal to buy Hershey for roughly $25 billion.
A representative for Hershey said the company had no comment beyond acknowledging that it had been in talks with Mondelez and that they had fallen through.
The news sent Hershey's shares down a little over 10% in after-hours trading on Monday as investors digested the news, while the Mondelez stock barely budged. It offered $107 per share, half in cash and half in stock, but the chocolate maker refused the bid in June.
Shares of the confectionery company Hershey plunged after it walked away from a merger proposal, and Apple slipped after the company was hit with a large tax bill in Europe.
Confectionery major Mondelez has abandoned talks to buy candymaker Hershey, two months after the USA chocolate company turned down its $23 billion cash-and-stock bid.
The Hershey trust holds 81 percent of the company's voting stock, and so a sale is not possible without its approval.
Late Monday, in a prepared statement Mondelez said there no longer existed a path forward to acquireHershey. Aside from the period since the bid was announced, this is the first time Hershey's stock has tradedabove $100 since early 2015.
A source told the Reuters agency that Rosenfeld approached Hershey chief executive John Bilbrey last week and offered $115 per share for the company.
The deal was seen as complementary in part because Mondelez gets most of its revenue from overseas, whileHershey gets most of its revenue from North America. While we believe that the long-term outlook for the global snacks categories in which Mondelez participates remains robust, the company is now facing short-term headwinds from slowing emerging market economies.
In response, Hershey said to start discussions the price would have to be at least $125 per share.
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Mondelez backs off from Hershey pursuit
Sep 2, 2016 | Senegal Actu
By Mercedes Poole
So what: Hershey received a $23 billion takeover bid from Mondelez in late June, a development that sent shares of the iconic chocolate company soaring.
In an official statement, the Oreo cookie maker's CEO Irene Rosenfeld stated that following the discussions, the company has decided that "there is no actionable path forward toward an agreement". An unfavorable de-rating Hershey shares are trading down in Monday's after-hours ($98-99 per share).
Mondelez International, one of the world's largest snack-makers, had put forward offers of $107 and $115 a share for Hershey, but the company's notoriously stringent board were uninterested, valuing the business at around $125 per share, according to the Financial Times.
The news dashed hopes for what could have been one of the biggest deals this year, combining Hershey, with a $US24 billion ($31.7 billion) market value, and Mondelez, which is valued at $US67 billion. It indicated that it would be hard to strike any deal prior to next year due to a shift in dynamics with Hershey Trust Company, its largest shareholder, said people close to the situation.
Hershey Trust Co.is in the midst of reconstitution of its board of directors after they were alleged for profligacy, disregard for term limits, and self-dealing. The trust owns 34 percent of the company's shares and controls about 80 percent of the vote. But despite these merits, we weren't convinced that even a higher price tag would make Hershey amenable to an agreement.
According to analysts and investors, Hershey's ownership by a trust has made it a almost impossible acquisition target.
Hershey's growth has slowed in the last two years as competitors such as Mars Inc expand their offerings, and premium players such as Chocoladefabriken Lindt & Spruengli AG LISN.S entered the USA market.
Last year, Mondelez came under fire after it was revealed that it had paid no United Kingdom corporation tax in 2014. In a letter to his investors earlier this month, Ackman wrote that Mondelez shares are now undervalued, and that the issuance of Mondelez stock to fund the acquisition of Hershey would likely be costly for Mondelez shareholders.
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