Mondelez (MDLZ) Enters Cookie Space With Tate's Bake Shop
Zacks Investment Research | May 06, 2018 11:00PM ET
In an attempt to keep up with consumer’s changing preference, Mondelez International, Inc. (NASDAQ:MDLZ) entered into an agreement to acquire cookie-maker Tate’s Bake Shop for approximately $500 million.
Tate’s is one of the fast growing, premium cookie and baked goods brand in the United States. The company’s retail sales in measured channels surged more than 40% through March 2018. Moreover, its sales quadrupled over the past five years.
Buyout Benefits
With the acquisition, Mondelez will able to bolster its presence in the fast-growing premium cookie segment. As Mondelez has been persistently facing the brunt of changing consumer preference in North America for a while, it is appropriate for the company to diversify portfolio. In 2017, net revenues fell 0.1% from the year-ago level.
The food industry has been struggling with numerous issues. Major U.S. food companies like Mondelez, General Mills (NYSE:GIS) , Kellogg Company (NYSE:K) , B&G Foods, Inc. (NYSE:BGS) are striving to retain market share with packaged food items losing ground. A shift in consumer’s preference toward healthier options and a higher level of price consciousness are hurting the industry, which is denting sales growth.
The acquisition can be considered a right move to fight the sales slump, as Tate’s uses authentic, high-quality and healthy ingredients, in line with the current consumer preference.
“Tate’s is a great strategic fit that will complement our portfolio of beloved snacks brands,” states Dirk Van de Put, Chairman and Chief Executive Officer of Mondelez.
Notably, Tate’s will operate as a separate standalone business, while providing resources to accelerate overall growth for Mondelez. The acquisition is expected to close during the summer of 2018.
Mondelez International, Inc. Price
Zacks Rank
Mondelez has a Zacks Rank #3 (Hold). You can see Original post
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