Investing.com– Global snack giant Mondelez International’s (NASDAQ:MDLZ) potential acquisition of Hershey Co (NYSE:HSY) would provide Mondelez with a strong foothold in the U.S. chocolate market while offering opportunities to expand Hershey’s iconic brands, such as Reese’s, internationally, Stifel analysts said in a note.
Cadbury-parent Mondelez was exploring the acquisition of chocolate maker Hershey, Bloomberg News had reported on Monday, citing people familiar with the matter, but did not reveal the financial details of the deal.
Stifel analysts estimate that Hershey’s shares could be valued between $200 and $225 in a deal. However, this would make the acquisition only slightly profitable for Mondelez by the second year, with initial losses expected, they said.
The Hershey Trust, which controls about 80% of Hershey’s voting power, remains a significant factor. Historically reluctant to sell, the Trust previously rebuffed Mondelez’s 2016 takeover attempt. Stifel notes that the Trust’s position could be pivotal in deciding Hershey’s future.
If successful, Mondelez could capitalize on cost efficiencies and revenue synergies, Stifel analysts said.
“The revenue synergies could be quite significant here, giving Mondelez an entry point into the United States where it could leverage the Cadbury and Milka brands, and giving Mondelez a stable of brands (particularly Reese’s) that it could use to complement its business or attack whitespaces throughout the world,” analysts wrote.