Mondelez (NASDAQ:MDLZ) has issued a press release stating the company will no longer pursue its acquisition of The Hershey Company (NYSE:HSY). Even with the topper bid to $115/share from Mondelez, it seemed unlikely that the Hershey trust would have been willing to part with the company, instead asking for $125/sh. The Hershey trust, the largest shareholder of Hershey Company with about 8% ownership, had opposed the sale in the past and was likely to remain a large obstacle to the transaction if the price was not met.
As a result of the deal breaking, Hershey has given back about half of the takeout premium in after-market trading, falling 12% to about $99/sh. The result of the lower price is a higher yield, with the yield increasing to 2.5% from 2.2%. Now that Hershey's investment story will again be a standalone company, we think it's time to revisit the yield story.
