June 30, 2016

A $23 billion half cash/half stock bid by Mondelez to take over chocolate rival, Hershey, has been rejected. Had the deal been successfully closed, it would have united the two candy giants that combined, have a market value of $90 billion, reports the Wall Street Journal. The merger of two of the world’s top five candy makers would have tied Hershey’s strong presence in North America with Mondelez’ global reach to create a company surpassing Mars Inc., which currently claims a 13.3% global market share, according to Euromonitor reports Reuters.

For this to happen however, Mondelez must gain approval from the reluctant Hershey Trust, which was established by the company’s founder Milton Hershey more than 100 years ago and which holds 8.4% of the company’s common stock and 81% of its voting rights. The Trust has a record to being adverse to a sale, however, Mondelez has stated that to gain approval it would agree to protect jobs within the new entity, would move its headquarters to Hershey, Pennsylvania, and would rename the new company Hershey, sources told The Journal.

Upon news of the bid breaking, Hershey’s shares jumped 15% to an intraday high of $117.79 reports CNBC, – the biggest jump since July 25, 2002, however, the stock has since been halted as the per share price on the market jumped the per share offer price of $107.

The company has been consistently very clear in the past that it desires to remain independent and today Hershey said in a statement, “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,” Hershey .

Currently based in Deerfield, Illinois, Mondelez saw sales of $29.6 billion last year, a year on year decline of 13.5% that is being attributed to currency pressure. In the first quarter of 2016 the company posted revenue of $6.5 billion, down 17% from the same time a year before due to a tightening on coffee.

Hershey, which includes approximately 80 brand names and has yet to respond to Mondelez’ offer, saw sales of $1.8 billion in the first quarter of this year, representing a 5.6% decline from the year earlier, again on currency shifts, while in 2015 the company had sales of $7.4 billion and earnings of $513 million.

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Lynda Kiernan