Ackman sets sights on maker of Oreos, Ritz crackers
Activist investor William Ackman’s hedge fund has amassed a $5.5 billion investment in Mondelez International, signaling that the maker of Oreo cookies, Ritz crackers and other popular snack brands could be a merger target.
Shares of Deerfield, Ill.-based Mondelez closed up 1.12% at $46.81 in Thursday trading after the announcement by Ackman’s New York-based Pershing Square Capital Management L.P.
The hedge fund said it plans to notify the Securities and Ex- change Commission that it has taken a 7.5% stake in Mondelez, including forward purchase contracts and call options.
“We welcome Pershing Square as investors,” Mondelez spokeswoman Valérie Moens said.
Pershing Square wants Mondelez CEO Irene Rosenfeld to improve dramatically the difference between the cost to sell a product and the revenue it produces, according to two people with detailed knowledge of the hedge fund’s plans.
They asked not to be identified because they were not authorized to speak publicly.
Last year, Mondelez reported margins of roughly 12%. Amid pressure from Ackman’s fellow hedge fund investor Nelson Peltz, who became a Mondelez director in January 2014, Rosenfeld more recently vowed to target income margins of 15% to 16% by 2016.
But Pershing Square thinks margins at Mondelez could move closer to the high teens and low 20s, one of the people familiar with the fund’s plans said.
With more than 1.6 billion shares outstanding as of July 24, Mondelez has an estimated market cap of nearly $75.6 billion. That size could limit the players in another potential scenario — a corporate takeover.
Ackman is open to a sale of Mondelez, the people familiar with the hedge fund’s plans said.
Morningstar analyst Erin Lash theorized that billionaire investor Warren Buffett’s Berkshire Hathaway and Brazil private equity firm 3G Capital could emerge as suitors for Mondelez, either individually or as partners.