Mondelez International today (11 December) outlined plans for a $9bn share buyback programme amid the speculation linking the Cadbury owner to fresh interest in rival confectioner Hershey.
Shares in Mondelez, which had dipped after Bloomberg reported on Monday a "preliminary approach" for the Reese's maker, rose today after a multi-pronged announcement.
Alongside the $9bn of share repurchases, Mondelez declared its regular quarterly dividend and said its acquisition strategy is "focused on bolt-on assets" similar to its recent deals for Greece's Chiptita and Mexico's Ricolino.
Elsewhere today, Bloomberg reported The Hershey Trust, the US snacks maker's controlling shareholder, had rejected Mondelez's approach for being too low.
Just Food has contacted Mondelez and Hershey for comment on Bloomberg's latest report. Both refused to comment on Monday when asked for a reaction to the news outlet's report on the Oreo owner's interest.
A Hershey spokesperson said today: "We do not comment on market rumors or speculation."
Announcing its buyback, Mondelez said: "The company also remains committed to its key capital allocation priorities, which include reinvesting in brands and capabilities, returning capital to shareholders through share repurchases and dividends, and M&A."
It added: "Given current market conditions, share repurchase remains an opportunity and key priority. The company remains committed to an acquisition strategy that is focused on bolt-on assets similar to recent acquisitions of Chipita, Clif and Ricolino."
The new $9bn repurchase programme replaces Mondelez's existing $6bn share facility, which was due to expire on 31 December 2025 and has $2.8bn outstanding or not utilised. The new buyback runs until the end of 2027.
Mondelez added: “The company may repurchase the shares in open-market transactions, privately negotiated transactions or a combination of the foregoing.”
As of 5:34pm GMT today, Mondelez’s share price was up 2.53% at $63.32, trimming this year’s loss to around 14%. Hershey's stock was down 2.49% at $182.52 on the New York Stock Exchange.
A dividend of 47 cents was also announced today for “shareholders of record” as of 31 December and payable on 14 January.
Chairman and CEO Dirk Van de Put said: “Our new $9 billion share repurchase authorisation reflects the strength of our business with robust profit dollar and cash flow growth to reinvest in brands and capabilities, while also returning significant capital to our shareholders.
“We continue to make significant progress against our strategy of accelerating growth and focusing our portfolio in the attractive, resilient categories of chocolate, biscuits and baked snacks.”
Eight years ago, Hershey’s board “unanimously rejected” a takeover approach from Mondelez worth $107 a share, or $22.83bn. At the time, Hershey described the offer as a “mix of cash and stock consideration”, as well as “other non-monetary considerations”.
Hershey is controlled by Hershey Trust Co. In 1909, Hershey founder Milton S. Hershey and his wife Catherine set up a trust with the Milton Hershey School as its sole beneficiary.
Hershey Trust Co. is trustee of the Milton Hershey School Trust. As trustee for the Milton Hershey School Trust, Hershey Trust Co. is the snacks group’s controlling stockholder and holds almost all its Class B common stock. It would need to approve any transaction with Mondelez.
In 2016, after having an initial bid rejected, Mondelez was reportedly ready to return with an offer worth $115 a share. At the time, The Wall Street Journal said Hershey rebuffed that idea but the publication claimed the company would start talking if an offer worth a minimum of $125 a share was tabled.
In the end, Mondelez walked away, with then chairman and CEO Irene Rosenfeld stating: “Following additional discussions, and taking into account recent shareholder developments at Hershey, we determined that there is no actionable path forward toward an agreement.”
In 2002, Hershey Trust Co. rebuffed interest from the then Wrigley. Five years later, the Trust prevented merger talks with Cadbury (now owned by Mondelez) and, in 2010, the trust prevented the chocolate group from bidding for the then independent Cadbury when the UK company was facing a hostile takeover bid from what was then Kraft Foods – which then subsequently spun off Cadbury and its other snack assets into Mondelez.
