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Mondelez International Inc. (NASDAQ:MDLZC) just offered $107 per share (half in cash, half in stock) in a $23 billion takeover bid of the Hershey Co. (NYSE:HSYD). Hershey’s board unanimously rejected the bid Thursday saying it “provided no basis for further discussion.”

So, that’s that, right? Not exactly, according to some analysts. Actually, when it comes to takeover bids in general, “No,” is often the first step in a move to “yes.” On the other hand, the Hershey/Mondelez deal faces some significant roadblocks.


A More Serious Problem

The Hershey Trust, which holds 8.4% of the company’s common stock and up to 81% of its voting power (depending on who is reporting) would have to approve any sale. The trust has opposed past offers including a planned merger with Wrigley in 2002.

Meanwhile, the Pennsylvania attorney general is investigating the trust’s board and several directors have already resigned. Some observers believe all this could change the board’s attitude about a potential sale.

Winning Over The Trust

As part of its bid, according to a private letter reported on by The Wall Street Journal, Mondelez pledged to protect jobs, locate the merged company’s global HQ in Hershey, Pa., and rename it Hershey.

Despite the significant and somewhat conciliatory offer, the Hershey Trust did not seem interested. This could be, at least in part, due to the very complicated history Mondelez has had in the food industry. The company has been linked to (and unlinked from) a number of food players including The Kraft Heinz Co. (NASDAQ:KHCC) over the years.

A Blockbuster Merger

The Mondelez/Hershey deal, if consummated, would create the world’s largest candy maker by combining number 2 Mondelez with number 5 Hershey. Number one is Mars with Nestle and Ferrero 3 and 4 respectively.

Despite the fact the merger would create a new number 1, most observers do not think antitrust authorities would balk. That’s because most of Mondelez’ sales are outside the U.S. and most of Hershey’s sales are in the United States.

Investors Will Not Be Swayed

Smelling blood – and profit – Wall Street investors drove Hershey shares up to their highest value ever - $113.46 or 17% on the day.

The thought of further consolidation in the food sector boosted closing prices for others, including General Mills Inc. (NYSE:GISC) which close up 5.10% at $71.32; Kellogg Company (NYSE:KC) up 5.26% at $81.65, and B&G Foods (NYSE:BGSC) which closed the day up 4.08% at $48.20.

Even Mondelez got in on the action, closing up almost 6% at $45.51.


Others In The Wings

If Mondelez does not prevail, some analysts believe other suitors may jump in. Nestle is one that is often thought of as a potential acquirer of Hershey. Two others include the afore-mentioned Kellogg and PepsiCo Inc, (NYSE:PEPC) which closed up 2.73% Thursday at $105.94.

CNBC’s Jim Cramer echoed much of this sentiment Thursday adding that “To grow, members of the food group must devour each other.” Succinct even partly graphic, but sentiment shared by many on Wall Street.

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