Coverage: Mondelez walks away from Hershey

Mondelez International Inc. ended its bid to acquire Hershey Co.after the famed chocolate-bar maker rebuffed a new takeover offer and indicated it would be difficult to strike a deal before next year.

Jess Stynes and Dana Cimulluca of The Wall Street Journal had the news:

Mondelez said in a statement after the market closed Monday that it determined there was “no actionable path forward” in its bid to buy its smaller rival.

The Wall Street Journal reported in June that Mondelez made a roughly $23 billion bid for Hershey, a tie-up that would create the world’s largest candy maker. Hershey rejected the offer, which amounted to $107 a share, half in cash and half in stock.

Mondelez Chief Executive Irene Rosenfeld privately indicated to Hershey officials a willingness to raise the bid to $115 a share last week, according to a person familiar with the matter. Hershey responded that the starting point for discussions would need to be $125 a share. Hershey also indicated that the trust that controls the company, which has been in turmoil, would need to complete a reconstitution before there could be a deal—something unlikely to happen until next year, this person added.

Both Hershey and Mondelez, which is based in Deerfield, Ill., have been under pressure amid a trend toward more-healthy eating and other factors.

John Kell of Fortune notes that Hershey’s stock fell by more than 10 percent on the news:

The news sent Hershey’s shares down a little over 10% in after-hours trading on Monday as investors digested the news, while the Mondelez stock barely budged.

Mondelez Chairman and CEO Irene Rosenfeld said that the proposal had reflected the company’s “conviction that combining our two iconic American companies would create an industry leader with global scale in snacking and confectionery and a strong portfolio of complementary brands.” But she said it became apparent that a deal wouldn’t get done.

“While we are disappointed in this outcome, we remain disciplined in our approach to creating value, including through acquisitions,” Rosenfeld said in a statement.

The future for Mondelez enters uncertain territory. Investors and Wall Street analysts have called for more consolidation among Big Food makers, which have faced tough growth prospects as many legacy brands have reported stalled sales growth in mature markets as consumer spending patterns change.

Greg Roumeliotis of Reuters reported that Mondelez’s CEO had made a new overture last week:

Mondelez’s Chief Executive Officer Irene Rosenfeld approached Hershey Chief Executive John Bilbrey again last week, and indicated that Mondelez would be willing to offer up to $115 per share for Hershey, according to a source familiar with the discussions who asked not to be identified because they were confidential.

Hershey responded that the trust would not be able to consider an offer until it is reconstituted next year, the source said. Even then, Hershey would not be willing to enter into deal negotiations for an offer of less than $125 per share, the source added.

Hershey did not respond to a request for comment. Its shares fell 11.4 percent in after hours trading in New York on Monday to $99.00.

“Following additional discussions, and taking into account recent shareholder developments at Hershey, we determined that there is no actionable path forward toward an agreement,” Rosenfeld said in a statement.

The Hershey trust holds 81 percent of the company’s voting stock, and so a sale is not possible without its approval. About two-thirds of its $12 billion in assets are in Hershey stock.