Market Overview

Bloomberg: Hershey Offers Mondelez A Much Needed Exposure To The U.S. Market

Bloomberg: Hershey Offers Mondelez A Much Needed Exposure To The U.S. Market

Mondelez International Inc (NASDAQ: MDLZ)'s bid to acquire Hershey Co (NYSE: HSY) ended in a failure, prompting some to suggest that the offer wasn't even a serious one in the first place.

Bloomberg's Craig Giammona has a somewhat different take and explained why Mondelez would be interested in acquiring Hershey.

Speaking to Bloomberg TV on Thursday, Giammona said an acquisition "makes sense" based on the geography involved. He noted Mondelez was split from Kraft in 2012 to "attack" emerging markets and the strategy "hasn't really panned out as thought."

Nevertheless, approximately 70 percent of the company's revenue is derived outside of the United States.

Related Link: 4 Potential Reasons Mondelez Bid For Hershey

Giammona continued that Mondelez is now forced to look at the U.S. domestic market to spur its growth. On the other hand, approximately 90 percent of Hershey's revenue comes from selling chocolate products in the United States.

Specifically, Hershey's Kit Kat chocolate is one of the top five best-selling candy in the United States and sold around 700 million units last year. This is a "really big piece of business" that Mondelez would have its eyes on.

Giammona acknowledged Hershey's business has been "vulnerable" to a takeover, but the complex ownership structure is a major hurdle. As such, the deal is likely "dead for now," but maybe Mondelez "will keep poking around."

Latest Ratings for HSY

Oct 2019MaintainsMarket Perform
Oct 2019Initiates Coverage OnSector Perform
Sep 2019DowngradesOutperformMarket Perform

View More Analyst Ratings for HSY
View the Latest Analyst Ratings

Posted-In: Bloomberg Craig Giammona HersheyAnalyst Color Long Ideas M&A Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (HSY + MDLZ)

View Comments and Join the Discussion!

Benzinga's Volume Movers

What The Hershey, Mondelez Merger Means For Nestle