More and more Manatees eating massive amts of chocolate.

Mondelez has a serious sweet spot for Hershey’s recession-resistant chocolate business

Chart R, 12-11-24

Mondelez, owner of Cadbury, Oreo, Chips Ahoy, and more, is getting sweet on the 130-year-old Hershey Co., as the food giant is exploring an acquisition of the ever-profitable chocolate maker, per Bloomberg.

This isn’t the first time that the packaged-food company has tried to acquire Hershey. In 2016, Mondelez attempted to sweet talk the chocolate company into a tie-up with a $23 billion bid, but execs eventually had to go home empty-handed after the majority-owning Hershey Trust Co. rejected the offer. Since then, Hershey’s stock has more than doubled — which is why this latest offer would have to be at a significantly higher price: Hershey Co.’s enterprise value (including debt) is some $43.8 billion. Indeed, Hershey's main owner has reportedly rejected the initial offer from Mondelez.

But there’s a reason why Mondelez might think it’s worth digging that deep into its pockets. With a few small exceptions — including this year, which will likely see a slight hit on profits from record-high cocoa costs — Hershey tends to always find a way to sell more chocolate and make a bigger bottom line... even through major global recessions.

The potential takeover only gets sweeter when you consider that the Chicago-based food firm already owns two of Europe’s top chocolate brands: Cadbury and Milka. Acquiring Hershey would consolidate the industry significantly, bringing the biggest name in the world of American chocolates — in 2022, Hershey reportedly had 36% of the market share in the US — into Mondelez’s portfolio. Being bigger makes negotiating those all-important cocoa and commodity contracts a bit easier.

The deal would be the latest in a long line of confection deals, as the industry grapples with the uncertainty of the potential impact of GLP-1 appetite suppressants like Ozempic. In August, Mars, the world’s largest chocolate company, agreed to a $35.9 billion deal to buy Kellanova.