According to the Zhitong Financial APP, informed sources revealed that the main owner of the American chocolate producer Hershey (HSY.US) rejected the initial acquisition offer made by Mondelez International (MDLZ.US). This Trade was expected to create a food giant with nearly $50 billion in total sales and become one of the largest acquisitions in the history of the Packaged Foods Industry.

Informed sources indicated that the Hershey Trust Co., which Holds about 80% of the voting rights of Hershey, rejected the acquisition offer on the grounds of a low bid.

Earlier this week, there were reports that Mondelez had preliminary discussions with Hershey. As of last weekend, Mondelez's Market Cap was about $84 billion, while Hershey's stood at $35 billion.

The Hershey Trust has previously used its voting power to block Trades. In 2016, Mondelez exited negotiations after Hershey rejected a $23 billion acquisition offer.

On Wednesday, Mondelez approved a share buyback authorization of up to $9 billion and stated that it will focus on its capital allocation priorities, including reinvesting in the brand and "focusing on the acquisition strategy to strengthen assets." Data compiled by Bloomberg indicates that Hershey's valuation (including debt) will exceed $40 billion, making it a considerable acquisition.

Adam Crisafulli from Vital Knowledge stated that this news has thrown cold water on any potential Trades involving Hershey.

Hershey was founded in the late 19th century and is known for its chocolate and confectioners brands. In November, the company acquired Sour Strips, expanding its confectioners business.

Cocoa prices have fallen from their peak but are still significantly higher compared to previous years, impacting Hershey. The cost of sugar is also high. Last month, Hershey lowered its net sales growth and earnings expectations as consumers under inflationary pressure began to pay more attention to their budgets. Hershey's Chief Financial Officer Steve Voskuil stated that by 2025, cocoa will become the "largest component" of the company's cost increase.

The packaged foods industry has been grappling with declining sales, slowed growth, and weak global consumer demand. As shoppers begin to resist price increases and become more health-conscious, companies are seeking innovations and new markets to boost sales, a trend that could trigger a wave of industry consolidation.

In August of this year, snack producer Mars agreed to acquire Kellanova, the maker of Pringles, for nearly $36 billion, a deal then regarded as the largest merger in the global food industry for 2024.

As of Wednesday's market close, Hershey's stock fell over 5%, while Mondelez International's stock rose over 2%.