Shares Spike as Oreo Maker Mondelez Reportedly in Talks to Take Over Hershey

Oreo manufacturer Mondelez is in talks to acquire candy company Hershey, according to a new report from Bloomberg News.

Mondelez International, which owns Cadbury and produces the beloved Oreo cookie, could acquire Hershey, adding the chocolate company into its expansive portfolio of sweets.

Hershey’s shares jumped 17 percent after the report, while Mondelez fell by about 4 percent during morning trading Monday. Hershey is estimated to have a market capitalization of $35 billion, while Mondelez has been valued at $84 billion.

While talks of the acquisition are in early stages, the decision could arrive after previous Mondelez attempts to acquire Hershey.

Mondelez attempted to purchase Hershey in 2016, but its $23 billion bid was rejected. Hershey also blocked attempts by General Mills, Kellanova, Tyson Foods and McCormick & Company to acquire the company.

Newsweek reached out to Hershey and Mondelez for comment via email.

Within the chocolate and candy industry, companies are facing higher costs as a result of inflation. Cocoa prices are especially high, which has forced businesses to increase prices for consumers. At the same time, demand is stalling as Americans remain less likely to spend additional money on chocolate and sweets.

Hershey saw its quarterly revenue fall to $3 billion last month, while Mondelez has been faring slightly better, reporting a 2 percent jump in sales to $9.2 billion last quarter.

“Mondelez and Hershey stocks have underperformed over the past few years, down approximately 7 percent and 22 percent, respectively, excluding dividends,” Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek. “Companies in the industry often seek economies of scale and ways to offset costs through consolidation, and Mondelez appears to be pursuing this strategy.”

Candy producer Mars, which owns M&Ms, made a deal to buy Kellanova, the owner of Cheez-Its, PopTarts and Pringles, for $36 billion in August.

Mondelez currently owns a wide range of America’s most beloved snack products, including Chips Ahoy, Ritz Crackers, Wheat Thins and Sour Patch Kids.

If the two companies forged a union, the same business leaders would be producing and selling the top sweet and savory snacks in America.

Hershey has created a brand name synonymous with its chocolate bars, but the company also owns heavy hitters like KitKat and Reese’s as well as Jolly Rancher and SkinnyPop Popcorn.

“The impact on the candy industry depends largely on the demand for their products,” Thompson said. “Economic theory suggests that reducing competition can drive up prices, especially as larger companies grow, and smaller players are edged out. However, the current reality is that the price of cocoa has skyrocketed.

“Mondelez likely sees this acquisition as an opportunity to gain value amid shifting market dynamics.”