MONDELEZ & CLIF BAR

By: Brooke Vandermyde

Mondelez International, Inc. (NASDAQ: MDLZ) is a confectionery, food, beverage, and snack company that operates in 150+ countries With a 137% market share in the global snacking industry, Mondelez prides itself on empowering consumers to snack right with their flagship products such as Wheat Thins, Oreos, and Ritz. After Dirk Van de Put stated that he wanted to prioritize more snacking segments within the industry, Mondelez announced on June 20, 2022 that they planned on acquiring Clif Bar & Company for $2.9 billion. The deal includes additional cash considerations if Clif surpasses certain undisclosed revenue targets in 2025 and 2026 for a potential payout of $24 billion Clif is currently #1 in the US protein bar market and is looking to expand to global markets with Mondelez’s help and expertise. For Mondelez, this acquisition furthers their efforts of prioritizing their snacking segments in key geographies like Latin America, as well as achieve long-term growth. These synergies are expected to be realized in year 2 through expanded global sales growth after allowing time to strategize marketing plans. Mondelez was advised by Morgan Stanley, and financed this deal through cash on hand and debt.

On August 1, 2022, the deal was finalized and MDLZ finished the trading day at $64.89 a share The stock currently sits at $7024, an 8% increase that is attributed to Mondelez’s aggressive horizontal acquisition strategy and is accompanied by an EPS of 1.96 in their most recent earnings report In the last 3 months of

2022, in part due to its acquisition of Clif, Mondelez’s net revenue increased by $361 million, and is projected to grow its top line by an additional 5% in 2023. On March 7, 2023, Mondelez began its restructuring efforts within Clif by replacing its CEO and 34 other executives that helped bring the deal to paper.

In my opinion, this deal was great for Mondelez and provides proof of its efforts to expand into new snacking segments to achieve long-term growth, which was a promise to shareholders in 2022. However, due to Mondelez’s size and standing in the industry, I do not see this deal single handedly impacting Mondelez a substantial amount. The protein bar market has seen a sharp comeback since the pandemic, increasing to an $8 billion market size. This acquisition puts Mondelez in a position to be a market leader in another snacking category, keeping them competitive against their biggest competitors such as Nestle, General Mills, and PepsiCo.

For Clif, this deal was also extremely beneficial as it was a privately owned company before, so its employees reaped a generous payout through this acquisition. This deal gives Clif Bar much-needed exposure to emerging markets and allows them to continue scaling in a more efficient manner. Overall, this deal will reap benefits for Mondelez and has already proven to do so through the increase in net revenues and share price. However, it will not present as much of an impact as anticipated to increase Mondelez’s revenue and earnings by a substantial amount.