The Hershey Company (HSY -0.46%) recently rejected a takeover bid from Mondelez International (MDLZ -1.12%), citing the control of its Class B shares held by the Hershey Trust Company. This entity maintains control of the business, regardless of the number of shares an investor buys.
The trust’s decision means Mondelez won’t be able to acquire Hershey due to the lack of approval from the board of the Hershey Trust Company. The trust holds nearly 55 million Class B shares that give it 10 votes each, controlling the company.
This is not the first time Mondelez has attempted to buy Hershey. In 2016, the company offered $23 billion but was turned down. While this deal didn’t materialize, Mondelez announced a $9 billion stock buyback plan and smaller acquisition opportunities to focus on.
Hershey faces current challenges, including an unprecedented spike in cocoa prices and demand headwinds due to popular weight-loss drugs and new candy brands. However, with $11 billion in annual sales and nearly $1.8 billion in net income, the company remains a storied brand with loyal consumers.
The Hershey Trust Company’s long-term ownership structure provides stability, allowing the company to execute its vision without short-term pressures. This approach may not make Hershey the top-performing stock of 2025, but it positions the company for success over the next century.
Source: https://www.fool.com/investing/2024/12/14/why-is-hershey-stock-on-a-roller-coaster-ride-this