Bill Ackman Craves Change At Snacks Maker Mondolez

Pershing Square, headed by activist Bill Ackman, is placing a bet that Mondelez will be a target in the consolidating food industry, according to reports.

Activist investor William Ackman has built a stake worth about $5.5bn (€5.05bn) in Mondelez worldwide, the maker of Cadbury chocolate and Oreo biscuits, in what is seen as an attempt to push the company to boost earnings or sell itself.

“We welcome Pershing Square as investors in our company”, a Mondelez spokeswoman said.

If Mondelez were to be purchased by a rival firm like Kraft Heinz, it would create yet another dose of deja vu as Cadbury was spun off in October 2012 by Kraft Foods Group as part of a snack food group that then changed its name to Mondelez worldwide.

In an initiation report on Kraft issued on July 21st 2015, RBC Capital opined that a Kraft and Mondelez merger would make sense. “We just rode his coattails”, Ackman said.

Mondelez welcomed the arrival of Pershing and insisted it would continue “to focus on executing our strategy and on delivering value for shareholders”. One potential acquirer is the Kraft Heinz Company, which has a market value of almost $100 billion.

With Ackman’s disclosure, Mondelez now has two of the best known activist investors as significant shareholders. Reuters could not immediately reach representatives at Kraft Heinz and PepsiCo for comment outside regular U.S. business hours.

Ackman’s $20-billion hedge fund, Pershing Square Capital Management, announced last night that it intended to notify the Securities and Exchange Commission that it had a 7.5-per cent stake, which included options and forward contracts, in the company.

Mondelez’s interactions with activist investors are not exactly new. On the back of the news, the stock of Mondelez jumped by around 4%, but later retracted and now trades around 0.80% in green.

Last month, however, Mondelez said it was making progress on its cost reductions and reported sales and profit that topped Wall Street estimates. Trian Fund Management operated by Nelson Peltz holds 3.1% in the company and he is a board member at Mondelez. CEO Irene Rosenfeld said in a statement at the time that the company would use the savings to increase investments in marketing, sales and capacity expansion to speed up revenue growth and improve market share.

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