Hershey Stock Rises On Takeover News By Rival Mondelez: Retail Sentiment Sours

Shares of Hershey ($HSY) rose more than 10% on Monday after larger fellow confectionery company Mondelez International ($MDLZ) was reportedly said to be exploring an acquisition of the former, dampening retail sentiment.

On Monday, Bloomberg reported that Mondelez, which makes Oreos, was in talks to buy the "Hershey Kisses" maker in a potential deal that would create a combined company with nearly $50 billion in annual sales. A potential deal would be the largest one in the sector this year.

Retail sentiment on the Hershey stock turned ‘extremely bearish’ (6/100) from ‘neutral’ (46/100) a week ago, with some users skeptical of the deal going through.

HSY sentiment meter and message volume on Dec 9

 

However, sentiment on the Mondelez stock was optimistic, with message volumes climbing into the ‘extremely high’ zone.

MDLZ sentiment meter and message volume on Dec 9

According to the Bloomberg report, Mondelez is seeking to expand its chocolate and snack businesses. The company made a “preliminary approach” and talks are reportedly in early stages.

Mondelez previously launched a takeover bid for Hershey in 2016 but scuttled the deal after Hershey didn’t accept the offer.

Hershey’s North America Confectionery segment net sales grew 0.8% to $2.48 billion during its most recent quarter while North America Salty Snacks segment’s net sales declined 15.5% to $291.8 million. 
A stocktwits poll on the merger pointed to users doubting Hershey shareholders would approve the deal.

Wall Street analysts were similarly skeptical about the deal’s prospects, with one firm, Jefferies, reportedly believing a potential deal has a "higher probability than in 2016."

HSY stock is up 0.71% year-to-date.

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