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Ackman Takes 7.5% Stake in Mondelez International Inc (MDLZ) but Market Has a Reserved Reaction

Investors might also be reserved about a possibility of a deal due to remembering a past experience of an attempt to consolidate the industry via a merger between Mondelez International Inc (NASDAQ:MDLZ) and PepsiCo, Inc. (NYSE:PEP). Nelson Peltz of Trian Partners had been trying to push for a combination of two companies, but dropped this idea after signing an agreement with Mondelez that gave him a seat on its board. However, Peltz kept boosting its stake in Mondelez and held 48.02 million shares at the end of March. Meanwhile, the company has been cutting costs and improving its financial situation. Therefore, Ackman would have to come up with some strong arguments if he tries to push for a takeover.

Overall, hedge funds are not so attracted to Mondelez International Inc (NASDAQ:MDLZ). At the end of March, 65 funds from our database held some $6.11 billion worth of stock, which is only slightly higher than the new position initiated by Ackman. Aside from the aforementioned Trian Partners, other shareholders with notable stakes include Andreas Halvorsen’s Viking Global and Boykin Curry’s Eagle Capital Management, which owned 23.97 million shares and 21.54 million shares respectively.

If Ackman is indeed planning to push for a sale of Mondelez International Inc (NASDAQ:MDLZ), he might face some strong opposition, probably as strong as in the case of Allergan. Pershing Square also has some background when it comes to investing in food companies. Aside from its investment in Burger King, earlier this year, Pershing Square purchased a stake in London-listed Nomad Foods, whose stock jumped by more than 95% year-to-date following its acquisition of Igloo, the largest producer of frozen foods in Europe.

Disclosure: none

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