What's going on?

Confectionery giant Mondelez said late on Monday that it would cease its attempts to buy chocolatier The Hershey Company. The deal would have created the world�s largest candy company.

What does this mean?

Mondelez made an initial bid for Hershey back in June. According to reports, Mondelez made a follow-up bid last week at a slightly higher price, but was rebuffed by Hershey. Hershey�s stock sold off about 10% on Tuesday, its first day of trading after the news broke that there would be no deal.



Hershey�s controlling shareholder is the Hershey Trust Company, which has opposed selling Hershey in the past and is undergoing an overhaul following a government investigation into its operations. Reportedly, it was a major obstacle to meaningful negotiations taking place.

Why should I care?

For the stock: The Hershey Trust is likely to dissuade further bidders � at least until its own situation is fully resolved.

The Hershey Trust has agreed to make changes to its board both this and next year. Since the Trust controls about 80% of the voting stock of the company, other potential bidders are unlikely to engage with Hershey until it looks like the Trust is at least in a position to negotiate with a potential buyer (which is likely part of the reason that Hershey�s stock sold off so much on Tuesday).



For you personally: This shows the power of voting shares.

The Hershey Trust owns a minority of Hershey overall, but it has effective control of the company because of its majority stake in the voting stock. That leaves the holders of non-voting stock at a disadvantage because they don�t have influence over key strategic decisions like this one (which could have been lucrative for them). It�s important for investors to note this dynamic when they own non-voting stock (for example, Facebook recently created separate non-voting stock).