Citi analyst Thomas Palmer keeps a Sell rating on Hershey (HSY) with a $165 price target after Bloomberg reported the company was approached by Mondelez (MDLZ) about a potential takeover. The firm sees strategic rationale for the acquisition, saying Mondelez has a large chocolate presence outside the U.S., while Hershey is large in the U.S. Based on Hershey’s stance when Mondelez approached it in 2016, Citi thinks a 30%-plus premium to last Friday’s close might be the starting point for talks. However, the firm also sees impediments, most notably The Hershey Trust’s historical reticence to pursue a takeout and the ability of the Pennsylvania Attorney General to challenge the transaction.
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