The Hershey Company (NYSE:HSY) stock is moving higher on Monday following a report suggesting that Mondelez International, Inc. (NASDAQ:MDLZ), owner of brands like Oreo and Ritz, is exploring a potential acquisition of the company.
The Details: A successful acquisition could result in the formation of a food conglomerate with a combined revenue of around $50 billion, according to Bloomberg, citing sources familiar with the matter.
Mondelez has initiated an initial inquiry regarding a potential merger. Mondelez and Hershey have engaged in merger discussions before. In 2016, discussions fell apart after Hershey rejected a $23 billion bid.
Any potential deal would need approval from Hershey Trust Co., which holds nearly all of the Class B stock in Hershey, granting it around 80% of the company's voting power. Also, there is no guarantee that the two companies will come to an agreement.
Why It Matters: The food industry is facing challenges like slower growth and changing consumer preferences, as shoppers become more mindful of both costs and health. This shift has prompted companies to seek new ways to expand, possibly leading to more mergers and acquisitions to stay competitive.
In addition, a successful merger could create a stronger player in the food industry. This might allow the combined company to have more influence over competitors and market trends.
Related Link: Unpacking the Latest Options Trading Trends in Lam Research
HSY Price Action: At the time of writing, Hershey stock is trading 14.2% higher at $199.52, according to data from Benzinga Pro.
Image: Photo via Pixabay
