Sherwood News

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

Mondelez has made a preliminary approach about a potential acquisition of Hershey, again.

12/10/24 5:22PM

Mondelez, the 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.

It isn’t the first time that the packaged-food company has tried to acquire Hershey. In 2016, Mondelez tried 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.

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.

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American Airlines joins the flock, hiking bag fees amid higher jet fuel prices

American Airlines on Thursday announced that it, too, will be hiking the fees it charges customers to check luggage.

With the move, all four of the major US airlines, which together control about 80% of the US market, have now hiked their baggage fees in recent days amid surging jet fuel prices.

The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

Since late March, JetBlue, Delta Air Lines, United Airlines, Canada’s WestJet, and Southwest have hiked their fees. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

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The change will go into effect on tickets bought on or after Thursday, the same day Southwest’s hike begins.

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Less than a year after implementing them, Southwest is also hiking its bag fees

Southwest Airlines has joined the growing list of airlines opting to hike their bag fees amid sustained higher jet fuel costs.

Starting today, the first checked bag at the carrier — which implemented bag fees less than a year ago — will jump from $35 to $45, and the second from $45 to $55. Southwest quietly disclosed the change Tuesday.

Southwest assigned the decision to “part of an ongoing analysis of the business and against the evolving global backdrop.”

As of Wednesday, jet fuel prices dropped to $4.16 a gallon, per the Argus US Jet Fuel Index, down from $4.81 on Tuesday following President Trump’s ceasefire announcement, which sent travel stocks soaring. Major airlines have shed some of those gains in premarket trading Thursday.

With the move to hike bag fees, Southwest joins JetBlue, United Airlines, Delta Air Lines, and Canada’s WestJet, all of which also boosted fees this month. Experts expect more major carriers to follow, and to potentially tweak the pricing of other ancillary revenue sources like seat assignments and carry-on luggage.

Three US airlines have already hiked baggage fees. More are likely on the way.