BMI View: Mondelēz's company history, including a bid for Hershey and through its previous association with Kraft, suggests that it may be interested in acquiring another confectionary business. This would be done to boost its North American revenues in our view, and we highlight Nestle's unit as potentially attractive. We don't believe it will be brought back into Kraft Heinz however, as a merger wouldn't benefit either company. One of our key views for the confectionary and snacks industry for the next five years is the expectation that there will be further consolidation among the major players (see 'M&A Needed To Consolidate Struggling Confectionary Market', July 21 2016). This is due to the crowded nature of the market, which is seeing demand for legacy chocolate, snacks and other confectionary products stagnate as consumer preferences shift towards healthier products. This ongoing trend promoted Mondelēz to launch a USD23bn takeover bid for Hersheys in June 2016, which was ultimately rejected by the trust that controls Hersheys.
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