Investor Ackman takes $5.5 billion stake in Cadbury owner Mondelez

Thu Aug 6, 2015 2:36pm EDT
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By Sruthi Ramakrishnan, Supriya Kurane and Martinne Geller

(Reuters) - Activist investor William Ackman has built a stake worth about $5.5 billion in Mondelez International Inc (MDLZ.O: Quote), the maker of Cadbury chocolate and Oreo cookies, in what is seen as an attempt to push the company to boost earnings or sell itself.

Mondelez has already taken steps to boost its operational performance, including shutting factories and shedding businesses. The company has also set a share buyback of up to $13.7 billion. But analysts said Ackman probably wants more.

"We suspect Mr Ackman's primary goal is to have Mondelēz sold," JP Morgan analyst Ken Goldman wrote in a note.

A slowdown in growth for the global packaged food industry has sparked a wave of consolidation as companies try to cut costs, boost efficiency and gain scale.

However, Mondelez's shares - which initially jumped on news that Ackman's Pershing Square Capital would become the company's biggest shareholder - were up less than 1 percent in early trading amid doubts about whether a buyer could be found.

At the current share price of around $46.40, Mondelez is valued at about $80 billion.

Some analysts mentioned newly formed Kraft Heinz Co (KHC.O: Quote) or PepsiCo Inc (PEP.N: Quote) as potential buyers.

J.P. Morgan's Goldman, though, said Kraft Heinz backer 3G Capital might be reluctant to make another acquisition so soon after its $46 billion deal to combine Kraft and Heinz.   Continued...

Bill Ackman, chief executive officer and portfolio manager of Pershing Square Capital Management, L.P., speaks at the Ira Sohn Investment Conference in New York, May 8, 2013. REUTERS/Brendan McDermid