Mondelez Approves $9 Billion Buyback After Making Hershey Offer

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Mondelez Approves $9 Billion Buyback After Making Hershey Offer

stock :: 2024-12-12 :: source - bloomberg

By Deena Shanker and Janet Freund

(Bloomberg) -- Mondelez International Inc. approved a stock repurchase authorization of as much as $9 billion amid a setback in its talks to buy chocolate maker Hershey Co., raising doubts about the deal.

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The new buyback program is effective beginning Jan. 1 and lasts through the end of 2027, according to a statement. It replaces an existing $6 billion authorization, which has about $2.8 billion remaining that would expire at the end of next year.

Mondelez had made a preliminary approach for Hershey, but the trust that controls the company rejected the bid as being too low, people familiar with the matter told Bloomberg News. A representative for Hershey said the company doesn’t comment on market rumors, and Mondelez didn’t respond to a request for comment.

Mondelez said Wednesday that its capital allocation priorities include reinvesting in brands and “an acquisition strategy that is focused on bolt-on assets,” a term used to describe relatively small deals. Hershey would have been a sizable acquisition with a market value of more than $40 billion including debt, according to data compiled by Bloomberg.

The buyback announcement “puts an end to the speculation” of a potential acquisition of Hershey, said Arun Sundaram, an analyst at CFRA Research. “The filing was clear” about the kinds of acquisitions Mondelez is seeking, Sundaram said.

Adam Crisafulli of Vital Knowledge agreed with the assessment, saying the announcement “poured cold water” on any potential Hershey deal.

Jennifer Bartashus at Bloomberg Intelligence said Hershey isn’t off the table for Mondelez despite the new buyback program. “This may not mean much in relation to its potential interest in Hershey,” she said.

Shares of Mondelez rose 2.5% at 12:11 p.m. in New York. Hershey fell 3%.

(Updates with latest on deal talks in first and third paragraphs.)