Mondelēz International Rises again on Takeover Speculation

Mondelēz again rose on speculation

Mondelēz International rose more than 4.0% in after-hours trading on December 14, 2016, after the speculation that Kraft Heinz (KHC) is going to acquire Mondelēz. According to Bloomberg, “Kraft Heinz Co. is not currently in talks to acquire Mondelēz International Inc., according to people familiar with the matter.”

Mondelez did not comment on these speculations.

There was the same rumor in the second week of November 2016, that Kraft Heinz would acquire Mondelēz after 3G Capital announced it would raise the funds to finance the acquisition of a consumer products company. After that speculation, the stock rose more than 4% on November 8, 2016.

Mondelēz International Rises again on Takeover Speculation

Price movement

Mondelēz International (MDLZ) fell 0.58% to close at $42.83 per share on December 14, 2016. The stock’s weekly, monthly, and YTD (year-to-date) price movements were 2.1%, 3.4%, and -3.3%, respectively, on the same day.

MDLZ is now trading 1.4% above its 20-day moving average, 0.28% above its 50-day moving average, and 0.30% below its 200-day moving average. It has a market cap of $66.7 billion.

Related ETF and peers

The Fidelity MSCI Consumer Staples ETF (FSTA) invests 3.2% of its holdings in Mondelēz International. The YTD price movement of FSTA was 4.6% on December 14.

The market caps of Mondelēz’s competitors are as follows:

  • PepsiCo (PEP): $150.2 billion
  • General Mills (GIS): $37.7 billion
  • Hershey (HSY): $20.8 billion

Mondelēz International’s 3Q16 performance

Mondelēz International (MDLZ) reported 3Q16 net revenues of $6.4 billion, a YoY (year-over-year) fall of 5.9% from net revenues of $6.8 billion in 3Q15, due to the deconsolidation of its Venezuela business and currency headwinds.

The company’s gross profit margin narrowed by ten basis points due to an increase in restructuring program costs. However, this rise was offset by the deconsolidation of its Venezuela operations.

Mondelēz International’s net income and EPS (earnings per share) fell to $548.0 million and $0.35, respectively, in 3Q16, as compared with $7.3 billion and $4.46, respectively, in 3Q15.

The company reported adjusted EPS of $0.52 in 3Q16, a rise of 36.8% over 3Q15. Between 4Q15 and 3Q16, Mondelēz’s cash and cash equivalents fell 9.8%, and its inventories rose 6.4%.

Quarterly dividend

Mondelēz International (MDLZ) declared a regular quarterly dividend of $0.19 per share on its Class A common stock. The dividend will be paid on January 12, 2017, to shareholders of record on December 30, 2016.

Projections

Mondelēz International made the following projections for fiscal 2016:

  • organic net revenue growth of ~1.6%
  • adjusted operating income margin in the range of 15%–16%
  • adjusted EPS growth of ~25% on a constant-currency basis

In the next and final part of this series we’ll look at Mead Johnson Nutrition (MJN).