Activist Investor William Ackman Buys $5.5 Billion Stake In Mondelez International

Mondelez and William Ackman

Activist investor William Ackman has acquired a stake worth about $5.5 billion in Mondelez International Inc, the maker of Cadbury chocolate and Oreo cookies.

Mondelez has been working to boost its operational performance. The company has shuttered underperforming factories while shedding some of its lesser-known businesses. The company also issued a buyback worth up to $13.7 billion.

In a note to investors JP Morgan analyst Ken Goldman wrote, “We suspect Mr. Ackman’s primary goal is to have Mondelēz sold.”

The global packaged food industry has experienced a slowdown that has led to consolidation with the hopes of cutting costs while boosting efficiency.

At its current share price of $46.40, Mondelez is valued at approximately $80 billion.

Reuters notes that Kraft Heinz Co or PepsiCo Inc. have been named as potential buyers.

Mondelez has reported seven straight drops in profit over its last seven quarterly reports. Mondelez is in the midst of a plan to cut approximately $3.5 billion in costs by the end of 2018 with the goal of reaching an adjusted operating margin of 15-16 percent in 2016.

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Mondelez recently separated its coffee business into a joint venture now called Jacobs Douwe Egberts, a move that has allowed Mondelez’s management to focus on its snacks business.

The company is next expected to sell its European cheese and grocery business which was turned into its own operating business in 2014.

Up to Wednesday’s close, Mondelez shares had risen 27.4 percent this year.