NEW YORK (AP) — Shares of Hershey are soaring after a report that it could be taken over by Oreo maker Mondelez International, a combination that would bring together some of the world's best-known chocolate and cookie brands under one company.
The Wall Street Journal, citing sources it did not name, reported Thursday that Mondelez recently sent a letter to Hershey proposing the deal. Mondelez said it would locate the headquarters of the combined company in Hershey, Pennsylvania, and take on the Hershey name, according to the Journal.
The deal would be subject to the approval of the Hershey Trust, the paper noted. The trust owns 8.3 percent of Hershey's shares, according to FactSet.
The Hershey Co.'s stock was up 15 percent at $112.34 in midday trading.
A spokeswoman for Mondelez, Valerie Moens, said the company does not comment on "market rumors or speculation." A representative for Hershey did not respond to a request for comment.
Mondelez International Inc., based in Deerfield, Illinois, also owns Cadbury chocolates, Trident gum, Nabisco cookies and Ritz crackers. The acquisition of Hershey would give the combined company 18 percent of the global candy market and make it the industry's largest player, according to Euromonitor International.
Mars Inc., which makes M&M's and Snickers, is currently No. 1 with 13.5 percent of the market.
Hershey gets the majority of its sales from North America, while Mondelez only gets about a quarter of its revenue from North America, and has a far bigger international presence. Mondelez had split from Kraft in 2012, taking brands that were seen as having bigger international potential.
A tie-up between Mondelez and Hershey would mark the latest chapter in a series of deals in the packaged food industry, with companies looking for ways to improve their financial results while up against struggling sales growth in major markets such as the U.S. When Heinz announced plans to buy Kraft last year, for instance, executives cited the cost savings that would be achieved by combining manufacturing and distribution networks.
Later this year, ConAgra Foods also plans to split into two publicly traded companies. One will hold onto branded products such as Slim Jim and Healthy Choice, while the other will take the company's Lamb Weston frozen potato business that supplies to restaurant chains and foodservice.