Here’s What Mondelez Plans to Do After It Failed to Buy Hershey

September 7, 2016, 4:42 PM UTC
Chocolate confection Milka
Chocolate confection Milka. (Newscast/UIG via Getty Images)
Photograph by Newscast—UIG via Getty Images

Mondelez International (MDLZ), the maker of Oreo cookies and Cadbury chocolates, outlined on Wednesday its plans to expand in the United States, a week after abandoning its pursuit of U.S. confectioner Hershey Co.

Mondelez, the second-largest confectionary company in the world, said on Wednesday it would bring to the United States its Milka Oreo chocolate bars that pairs Oreo cookies with Milka, which is popular in Europe.

The Milka Oreo chocolate bars, which are already available in more than 20 countries, are targeted at the mainstream segment of the roughly $14 billion U.S. chocolate market, Mondelez said.

In the premium segment, Mondelez is expanding its Green & Blacks products, which contain no artificial colors, flavors or preservatives.

Mondelez said on Aug. 29 it was no longer pursuing the acquisition of Hershey, the number five confectionary company in the world, two months after the company turned down its $23 billion cash-and-stock bid.

The merger of Mondelez with Hershey (HSY), which makes Hershey’s Kisses and Reese’s Peanut Butter Cups, would have expanded the former’s limited U.S. footprint and created the world’s largest confectioner.

Instead, now Mondelez has to chalk out its own course.


Mondelez also said on Wednesday it was strengthening its sales and distribution operations, enhancing in-store execution and chalking out better routes to market, especially in emerging markets.

The company said it was building up its e-commerce snacks business with the aim of generating at least $1 billion in revenue by 2020. Analysts expect Mondelez to generate total revenue of about $30 billion in 2020, according to Thomson Reuters I/B/E/S.

The chocolate maker reaffirmed its 2016 adjusted operating income margin forecast of 15 percent to 16 percent and 2018 forecast of 17 percent to 18 percent.

The company said it was on track to deliver free cash flow of at least $1.4 billion in 2016, and that it expected that number to double in 2018.

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