By Mariona Planella Boix, Ismael Fathy Martínez, Pau Rodríguez Coll (ESADE), Axel Mebarek, Pierre Pinsault (Grenoble École de Management)
Overview of the deal
Acquirer: Mondelez International Inc
Target: Hu Master Holdings
Implied Equity Value: Not Disclosed
Total Transaction Size: Not Disclosed
Closed date: January 4, 2021
Target advisor: Not Disclosed
Mondelez will be acquiring Hu to expand the healthy snack market, as the company noted that Hu has loyal customers for its vegan and paleo-friendly chocolates. This deal comes at around two years after Mondelez International Inc made an initial minority investment in Hu through SnackFutures, with the aim to unlock new snacking options and exploit future opportunities in chocolate and crackers. According to a Wall Street Journal report, the deal values the chocolate-bar maker at more than $250m.
Company Details: (Acquirer - Mondelez International Inc)
Mondelez International Inc. is a company that manufactures and markets snack food and beverage products for consumers in more than 160 countries. Its brands spanned five product categories: Biscuits, including cookies, crackers and salted snacks; Chocolate; Gum and candy; Beverages, including coffee and powdered beverages, and Cheese and grocery. Its portfolio includes well-known brands, including Oreo, LU, Milka, Toblerone, Trident and Halls.
Headquarters: Illinois, USA
CEO: Irene Rosenfeld
Number of Employees: 99,000
Market Cap: $80,7B (as of 28/01/2021)
LTM Revenue: $26,2B
LTM EBITDA: $4,7B
LTM EV/Revenue: 3.7x
LTM EV/EBITDA: 18.7x
Company Details: (Target - Telefónica)
Hu Master Holdings LLC is a multinational chocolate-bar maker based in the United States providing food services. Hu serves customers on a global level with vegan, paleo-friendly chocolate bars made with organic cacao. The company was acquired by Mondelez in January 2021.
Headquarters: New York, USA
CEO: Mark Ramadan
Number of Employees: 6,000
Market Cap: Not Given
Projections and Assumptions
After taking a stake in the capital in April 2019, Mondelez took a majority share at the beginning of 2021. Nevertheless, Hu Master Holding will remain independent from Mondelez in order to maintain the entrepreneurial spirit and healthy image embodied in their slogan "Get Back to Human" which has been so successful to date.
This acquisition supports the development of Hu Master Holdings, which will benefit from Mondelez' resources and thus accelerate its already dynamic growth while remaining focused on its core business, high-quality snacks such as chocolate bars, crackers, chocolate-covered nuts and berries.
For Mondelez, Master Hu Holdings will complement an already rich brand portfolio by strengthening its healthy food segment with a company -Master Hu Holdings- on a rise within a market which is projected to reach USD 108.11 bn by 2027. Indeed, the acquisition of Master Hu Holdings is part of a strategy to develop healthy brands and represents a real opportunity for growth while its most famous brands (Oreo, Milka, Toblerone or Hollywood Chewing Gum) are aimed at a very different audience and far away from the healthy snack.
Mondelez will thus be able to benefit in the long term at the technical level from the innovative products offered by Master Hu Holdings, which manages to eliminate foods of animal origin while maintaining the initial taste, to the delight of lovers of healthy foods. Potential synergies therefore exist to conquer tomorrow's markets.
Eventually, Mondelez hopes to take advantage of the huge healthy food market that has been growing for several years now. In fact, these snacks are quick to eat without being harmful to consumer’s health and, according to a study conducted by Mondelez recently published, 59% of adults worldwide would rather eat several small meals than some larger ones. In 2021, this market should reach USD 811.82 bn with a forecasted growth rate of +2.8% in comparison to 2020.
This acquisition is part of Mondelez's global approach to ever-stronger product innovation and a resolutely forward-looking strategy with for example the creation of the SnackFutures innovation hub – a venture whose aim is to finance innovative snacking alternatives. This reflects the long-term strategy of moving upmarket towards better quality and healthy products which respect the environment.
Risks and Uncertainties
However, this market is facing increasing competition with ever more innovative players both in the composition of the products they offer and in the communication around them such as General Mills or Danone.
Similarly, the snacking market is very changeable and new trends can sometimes appear from one year to the next depending on the fashionable diet. It’s therefore essential for a multinational company such as Mondelez to be highly adaptable in order to address the most complete range of products to their customers and thus remain competitive.
Healthy snacks are also often criticised because they lack taste or have a different texture, so there is a real technological effort to be made to make these products as tasty as they are healthy in order to reach as many potential customers as possible.