Mondelez's Sugary Valuation Could Cause Wealth Decay
Stephen Simpson, CFA • 14 Comments
Stephen Simpson, CFA • 14 Comments
Today, 8:19 AM
- Organic revenue was up 1.5% for Mondelez International (NASDAQ:MDLZ) in Q2. On a reported basis, revenue was down 17.7% during the quarter, led by a 27% fall in Europe and 32% decline in Latin America.
- Gross profit margin rate -10 bps to 39.9%. Operating income margin rate -90 bps to 10.1%.
- The company says it used pricing in some markets to offset higher input costs. A move to "zero-based budgeting" also helped to pad the bottom line.
- Mondelez sees full-year organic revenue growth of ~2% and EPS of $0.03 to $0.05. Looking ahead, the launch of Milka chocolate in China and e-commerce investments are expected to pay off.
- Previously: Mondelēz beats by $0.04, misses on revenue (July 27)
- MDLZ -1.13% premarket to $44.74.
Today, 8:03 AM
Yesterday, 5:30 PM
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Mon, Jul. 25, 8:54 AM
- Mondelez International (NASDAQ:MDLZ) is higher in early trading with a clearer path ahead of the company in its pursuit of Hershey.
- Susquehanna upgrades shares to Positive off the new developments.
- Analyst Pablo Zuanic estimates cost and top line synergies would create 25-30% upside for Mondelez if a deal is finalized. Even if the deal falls through, Zuanic reasons that Mondelez could be a target itself in the rapidly consolidating food sector.
- Previously: Hershey Trust settling with state attorney general over governance (July 22)
- MDLZ +1.11% premarket to $45.63.
Fri, Jul. 22, 5:53 PM
- The Hershey Trust (NYSE:HSY), facing a court date over governance charges, will settle with Pennsylvania's attorney general to resolve its investigation, according to Dow Jones reports.
- That action will include more resignations on its board. Several members of the Hershey Trust board have resigned over the past year, amid a takeover attempt by Mondelez (NASDAQ:MDLZ).
- The attorney general has been probing the trust -- a charitable trust that controls the fate of the Hershey Co. -- for excessive spending and letting board members overstay their terms.
- Updated 5:58 p.m.: Reuters reports that the deal will put 10-year term limits on trustees, with three trustees (Joseph Senser, Robert Cavanaugh and James Nevels) required to step down by the end of this year, and Chairwoman Velma Redmond leaving by the end of 2017 along with James Mead. Trustees' compensation will also be capped.
- Previously: The Hershey Trust may be heading to court (Jul. 14 2016)
- Previously: More disruption with the Hershey Trust (Jul. 11 2016)
Thu, Jul. 21, 1:54 PM
- The latest developments with the Hershey Trust increase the chances of Mondelez International (MDLZ -0.1%) upping its offer down the road or a new bidder such as Nestle (OTCPK:NSRGY) stepping in, observes CTFN.
- The Hershey Trust is working to settle charges from the state attorney general's office and there are signs that deal talks can progress if a Pennsylvania jobs commitment is made.
- Hershey trade at $109.14 at last check. Last month, the company rejected an offer at $107 from Mondelez.
Tue, Jul. 19, 5:42 PM
Thu, Jul. 14, 9:48 AM
- The charitable trust with a controlling interest in Hershey (HSY +0.5%) may have to go to court to face the Pennsylvania Attorney General's office over governance charges, sources tell The Wall Street Journal.
- The court battle would be a major distraction just as Mondelez International (MDLZ +0.4%) dials up pressure on a sale.
- Hershey trades right around $109 after running up to as high as $115 amid takeover talk.
Mon, Jul. 11, 2:12 PM
- A bill requiring food companies to label GMO ingredients was approved by the U.S. Senate by a 63 to 30 vote and now heads to the House of Representatives.
- The negotiated bill requires food companies to label genetically modified food by a phrase, symbol on the package, or a bar code that can be scanned by smartphones.
- The Department of agriculture still has two years to write the precise labeling rules if the House approves the bill.
- The passage of the bill is seen as a positive for the food sector as the alternative of having to adhere to state-by-state rules could create operational chaos for national sellers.
- Food stocks: SENEA, SENEB, THS, OTCPK:NCRA, CPB, MDLZ, GIS, OTCPK:NSRGY, FLO, CAG, DF, SJM,DF, ANFI, JJSF, WWAV, UL, OTCQX:DANOY, OTCPK:PLATF, POST, K, PEP, DMND, PF, HAIN, KO, BETR, KHC, WILC, PPC, PF, LWAY, HRL, TSN, DTEA, SAFM, BRID.
Mon, Jul. 11, 1:41 PM
- A board member of the trust that holds a controlling stake in Hershey (HSY) has resigned following the company's rejection of an offer from Mondelez International (MDLZ -0.5%), according to Reuters.
- Joan Steel's resignation is the fourth from the Hershey Trust board since last year amid a battle with the Pennsylvania Attorney General's office over its corporate structure.
Wed, Jul. 6, 7:41 AM
- Susquehanna analyst Pablo Zuanic thinks a number of political challenges stand in the way of Mondelez International (NASDAQ:MDLZ) acquiring Hershey (NYSE:HSY).
- The controlling Hershey Trust (81.5% of voting stock) would need the backing of the Pennsylvania Attorney General, governor, and legislature during an election year in the state.
- Hershey closed at $110.55 yesterday after trading as high as $117.79 after the Mondelez talk ignited last week.
- Hershey rejected the first offer from Mondelez.
Mon, Jul. 4, 6:02 AM
- While Hershey's (NYSE:HSY) board of directors unanimously rejected Mondelez's (NASDAQ:MDLZ) $23B bid on Thursday, its once impenetrable defenses are now looking weaker, Reuters reports.
- The Hershey Trust (which holds 81% of the company's voting stock) is under investigation and the Pennsylvania AG's office (which has say in any change in Hershey's ownership) is probing how much it spends and how long its directors have served for.
- Given the upheaval at the trust and the potential for three new board members, some analysts feel there is a chance the trust could be more open to a sale of the confectioner in the future.
Thu, Jun. 30, 2:31 PM
- Hershey (NYSE:HSY) says it has rejected the takeover bid from Mondelez (NASDAQ:MDLZ), with a unanimous vote.
- The company said it got a nonbinding indication of interest for a cash-and-stock deal totaling $107/share of Hershey common stock, along with nonmonetary considerations.
- Hershey says it carefully reviewed the indication of interest, the board uninamously rejected it, and that it determined it provided "no basis for further discussion between Mondelez and the company."
- Shares of Hershey still halted. MDLZ is up 4.2%.
- Updated 2:37 p.m.: Hershey has resumed trading, down slightly from its all-time high of $117.79 set earlier but still up 13.5% on the day.
- Previously: Hershey rises 19% on report of blockbuster buyout offer from Mondelez (Jun. 30 2016)
- Previously: Hershey jumps 7.6% on report of takeout bid by Mondelez (Jun. 30 2016)
Thu, Jun. 30, 10:54 AM
- Hershey (NYSE:HSY) is now up 19.4% after reports of a buyout offer by food giant Mondelez (MDLZ +1.8%).
- Terms of a deal aren't known, but Hershey is worth $21B and Mondelez nearly $70B, and the combination would unite a well-known American candy brand with the maker of Cadbury chocolates.
- Any deal depends on the approval of the Hershey Trust (holders of 81% of its votes), which has opposed selling in the past.
- Mondelez is trying to make a compelling case, though, promising to relocate its chocolate HQ to Hershey, Pa., and rename itself Hershey.
- Updated 12:29 p.m.: Hershey shares halted again for news.
Thu, Jun. 30, 10:36 AM
- Mondelez (NASDAQ:MDLZ), the food giant that had been carved out of Kraft Foods, has made a takeover bid for Hershey (NYSE:HSY), The Wall Street Journal reports.
- Hershey shares are up 7.6% in response.
- MDLZ is up 1.4% today.
- Updated 10:39 a.m.: Coming off a halt, Hershey is now up 17.5% to $114.09.
- Updated 10:45 a.m.: Hershey halted again, up 21.3%.
- Developing story ...
Mon, Jun. 27, 6:23 PM
- A lawsuit filed by options and future traders charging Kraft Heinz (KHC -0.1%) and Mondelez (MDLZ -2.1%) with price rigging will be allowed to proceed following a federal judge's ruling.
- The traders say the food giants illegally manipulated the price of wheat at their expense. At issue is a large late 2011 purchase of wheat futures that the plaintiffs say violates Sherman antitrust law and the Commodity Exchange Act.
- That charge moves forward, though a related claim that the two companies ran "wash trades" for a decade to hide manipulation was dismissed (and can be brought again).
- The case is similar to allegations raised by the Commodity Futures Trading Commission, which had previously noted Kraft Foods bought $90M in wheat futures in December 2011 to take a dominant position in the market without ever intending to take possession of the wheat.
Mondelez International, Inc. is engaged in the manufacturing and marketing of snack food and beverage products, which include biscuits such as cookies, crackers and salted snacks, chocolate, gum & candy, coffee & powdered beverages and various cheese & grocery products. It operates its business... More
Sector: Consumer Goods
Industry: Food - Major Diversified
Country: United States
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