(Reuters) -Cadbury-parent Mondelez International is exploring the acquisition of chocolate maker Hershey, Bloomberg News reported on Monday, citing people familiar with the matter, in what would create one of the world’s largest confectioners.
Shares of Hershey, which has a market capitalization of about $35 billion, rose 17%, while those of Mondelez were down about 4% in morning trading.
Mondelez, which is valued at around $84 billion, has made a preliminary approach about a possible combination, Bloomberg reported, adding that deliberations were in the early stages and there was no certainty that discussions would lead to a deal.
Both Mondelez and Hershey declined to comment.
The Hershey Trust Company, a charitable trust that has as its sole beneficiary the Milton Hershey School, maintains voting control over The Hershey Company and its approval is key in any deal.
This is not the first time that Mondelez has tried buying Hershey.
In 2016, the maker of Oreo cookies and Cadbury chocolate maker abandoned the pursuit of Reese’s Peanut Butter Cups owner after the latter rejected a $23 billion takeover bid.
Chocolate companies as well as packaged food firms have been under pressure from rising input costs, especially cocoa prices, forcing firms to raise prices but on the other hand face declining consumer demand due to price hikes.
This has led to a rise in deal-making in the industry.
Earlier this year, family-owned candy giant Mars said it would buy Cheez-It maker Kellanova in a nearly $36 billion deal, bringing together brands from M&M’s and Snickers to Pringles and Pop-Tarts in what was at the time the year’s biggest deal to date.
Last month, Hershey trimmed its annual revenue and profit after its quarterly revenue dipped to nearly $3 billion. Mondelez on the other hand reported a near 2% rise in sales to $9.2 billion in the latest quarter.
(Reporting by Aishwarya Venugopal, Anuja Bharat Mistry in Bengaluru and Jessica DiNapoli in New York; Editing by Anil D’Silva)
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