Ackman snatches $5.5B stake in Oreo-maker Mondelez

Activist investor Bill Ackman is paying approximately $5.5 billion for a 7.5 percent stake in Mondelez global Inc. “However, the position was worth some $5.5 billion at Wednesday’s closing price in New York, and Ackman is likely already sitting on a sizable profit on paper”. This year that group was acquired to form Kraft Heinz.

“We welcome Pershing Square as investors in our company”, Mondelez spokeswoman Valérie Moens said in a formal statement issued by the firm. “We’ll continue to focus on executing our strategy and on delivering value for all our shareholders”.

Such cost-cutting has become common for major packaged food companies, which are up against shifting tastes that favor foods marketed as fresher or more natural.

A sale to Kraft Heinz would recombine Mondelez and its former Kraft unit in a remarkable circle of corporate rearrangement.

Representatives for Kraft Heinz and Pershing Square declined to comment.

Kraft Foods has also undergone dramatic change.

Keep in mind that Peltz has a long history with Mondelez CEO Irene Rosenfeld, having agitated earlier for the Kraft-Mondelez split. Kraft held Mondelez and the United States food manufacturers required the treats. The two activists haven’t spoken about Mondelez, the people said. That came after Peltz stopped pressuring Mondelez to merge with PepsiCo.

That move has freed up Mondelez’s management to focus on its snacks business.

Knowledgeable sources say Ackman is on the same page as Peltz regarding the snack giant, and believes that Mondelez has many top brands in the high-margin snack sector. Bernstein analyst Alexia Howard wrote in a research note last week that one possible scenario is for Kraft Heinz to acquire General Mills Inc. first, then Mondelez.

That deal was orchestrated by Heinz’ owners, Warren Buffett’s Berkshire Hathaway and the Brazilian investment firm 3G Capital.

However, a source told CNBC that Pershing Square was considering a takeover of the company. Mondelez also has closed underused factories and invested in new, more efficient ones aimed at lowering future costs.

Ackman, one of America’s most successful investors, joins fellow activist Nelson Peltz as an investor in Mondelez, which reported its seventh straight drop in quarterly revenue last week.

Up to Wednesday’s close, Mondelez shares had risen 27.4 percent this year.

Altogether, Mondelez’s shares are up about 65% since the Kraft split.

Many large food companies have been cutting costs to offset slower growth or put savings back into marketing in an effort to boost sales.

As a result, they’re taking on bigger targets. Peltz is a prominent stakeholder in both companies.