Hershey shares dip on Mondelez $9B buyback plan

On Wednesday, shares of Hershey (NYSE: HSY) saw a decline in pre-market trading. This movement came in response to an announcement from Mondelēz International, Inc. (NASDAQ: MDLZ) regarding a new share repurchase program. The program, which has been approved to commence on January 1, 2025, will authorize the buyback of up to $9 billion of its Class A common stock.

The news of Mondelēz's share repurchase plan follows a recent increase in Hershey's stock earlier in the week. The rise was attributed to reports that Mondelez (NASDAQ:MDLZ ) was considering the acquisition of Hershey Foods. Despite the potential acquisition buzz, the announcement of the buyback plan seems to have tempered investor enthusiasm for Hershey shares.

Mondelēz's decision to implement such a significant repurchase program underscores the company's confidence in its long-term growth and financial strength. The $9 billion authorization represents a substantial investment back into the company and reflects a strategic move to enhance shareholder value.

The share repurchase program is a common strategy used by corporations to reduce the number of shares on the market, often resulting in an increase in the value of remaining shares. For Mondelēz, this move is set to take effect in the future, indicating a planned approach to capital allocation.

Investors and market watchers will likely continue to monitor the developments between Mondelēz and Hershey, as well as the impacts of the share repurchase plan on both companies' stock performance. As of now, the market is reacting to the immediate news of the buyback authorization, which seems to have influenced Hershey's stock in pre-market trading on Wednesday.

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Source: Investing.com