- Mondelez International CEO Irene Rosenfeld seemed to indicate the snack and candy giant is not interested in purchasing Nestle’s U.S. candy business, according to an interview with The Bottom Line.
- Wall Street speculated Mondelez could be one potential bidder of Nestle’s U.S. candy operations, according to recent notes from Jefferies, Morgan Stanley and Bloomberg Intelligence.
- “We are quite satisfied with the portfolio we have today,” Rosenfeld told The Bottom Line. "We don’t need M&A to deliver our growth and we are very much focused on our strategy of driving growth by accelerating our core products, by continuing to expand into white spaces like chocolate in China, chocolate here in the US, and continuing to expand our position in all kind of — all retail channels including e-commerce."
It’s unclear whether Rosenfeld is not interested in participating in M&A in just the candy space or across the company as a whole. At first glance, it’s easy to see why Mondelez would be a logical target to buy Nestle’s American candy operations. Mondelez’s current candy business includes Cadbury, and a deal with Nestle would add well-known brands such as Butterfinger, Baby Ruth and Crunch to the fold. It’s possible that Mondelez is looking for growth in other parts of the company, or that it isn’t interested in Nestle’s U.S candy business.
The maker of Oreo cookies, Trident gum and belVita breakfast biscuits has struggled along with its peers as consumers shun packaged foods in favor or healthier, fresher items. The manufacturer, which has a wide-ranging international presence, also has had a difficult time developing emerging markets.
The food and beverage space has been widely seen as ripe for mergers and acquisitions. Tyson announced in April it would buy convenience and ready-to-eat foods company AdvancePierre in a deal valued at $4.2 billion.
But many deals have been discussed publicly only to later fall apart over price. Unilever rejected a $143 billion takeover from Kraft Heinz in February, and Mondelez itself announced last summer that it has ended discussions with Hershey about a potential purchase of the iconic candy maker. Conagra also was rebuffed in a bid to snag Pinnacle Foods. But these abandoned deals have not minimized the furor over the potential of activity in the space.
In other cases, activist investors have been instrumental in pushing for change. Nestle announced last month it planned to buy back about $21 billion worth of its shares and focus its capital spending efforts on high-growth food and beverage categories just days after billionaire activist investor Daniel Loeb purchased 1.25% of the company's shares and issued a letter on changes the firm should make to its business.
Mondelez has been no stranger to outside involvement either. After its revenue tumbled 12% in 2016, leading activist investors Nelson Peltz and William Ackman pressured the company toward improving its profit margins. The company has since announced it is looking for a new CEO to replace Rosenfeld.
Mondelez is at the forefront of companies rumored to be involved in a big deal, either buying another company or being acquired. A reunion with its one-time partner Kraft is among the long-discussed transactions being talked about on Wall Street. While a smaller deal with Nestle, at least publicly, doesn’t appear to be of interest for Mondelez, it wouldn’t be a surprise to see the food products maker engage in some type of bigger transaction in the near future.