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Mondelez to Acquire Chipita for $2B, Expand Bakery Portfolio

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Mondelez International (MDLZ) has agreed to acquire Greek snacking company Chipita S.A. for approximately $2 billion. The company, which sells snack food and beverage products, plans to fund the deal with existing cash and new debt issuance.

Chipita produces and markets savory and sweet snacks. The company’s portfolio of croissant and baked snack brands includes 7Days, Chipicao and Fineti. It generated revenues of approximately $580 million in 2020.

The transaction is subject to certain closing purchase price adjustments, relevant antitrust approvals and closing conditions.

The deal is in line with the Mondelez’s strategy to expand into the fast-growing snacking business to meet the surge in demand in this segment. The acquisition will add a new category of snacks to Mondelez’s bakery portfolio.

Furthermore, the deal will expand Mondelez’s geographic reach. It will enhance the company’s distribution capabilities in the Central and Eastern European markets, significantly expanding its presence in those fast-growing markets.

The company expects the buyout to be immediately accretive to its earnings per share from the time of closure of the deal.

Mondelez International CEO Dirk Van de Put said about Chipita, “Their iconic brands and significant scale across so many attractive geographies make them a strong strategic complement to our existing portfolio and future growth ambitions in Europe and beyond.” (See Mondelez International stock analysis on TipRanks)

Following the acquisition announcement, Jefferies analyst Robert Dickerson reiterated a Buy rating and a price target of $68 for a 6.9% upside potential.

Dickerson said, “Given Chipita’s products are produced in 13 manufacturing plants and sold in over 50 countries, the acquisition broadens MDLZ’s reach not only within the broader baked-snacks category (and its Choco-bakery lines) but also provides leverageable manufacturing capacity and distribution reach such that material revenue synergies across the broader MDLZ and Chipita portfolios should develop over time, all while evident cost synergies and enhanced scalability benefits should improve profitability quickly.”

He further said, “We estimate acquisition multiples near 3.5x 2020 revenues and ~20x EBITDA, but again 2020 was more a trough year, according to MDLZ, and these estimates are pre-synergies, both cost and revenue.”

Consensus among analysts is a Strong Buy based on 10 Buys and 1 Hold. The average analyst price target stands at $68.27 and implies upside potential of 7.3% to current levels. Shares have gained almost 26.4% over the past year.

TipRanks data shows that financial blogger opinions are 100% Bullish on Mondelez, compared to a sector average of 69%.

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