Hershey Options Soar on Takeover Speculation

The Hershey Company (HSY) saw its options volume soar on Friday as talk of a takeover again hit the market. Over 7,000 call options contracts traded hands in mid-day trading as put volume remained steady at around 400 contracts. The majority of the action was centered around the September $45 calls, which are 11.4% out-of-the-money with just 7 days remaining until expiration. The October $50 calls also saw higher than average volume despite being 23.6% out-of-the-money with 35 days remaining.

Rumors of a Hershey takeover have become commonplace ever since Mars announced that it was buying WM. Wrigley Junior. Analysts have called a takeover unlikely, but noted a joint venture with Nestle or Kraft Foods wouldn’t be out of the question. The reasoning behind the sentiment is because Hershey is loaded with low-margin products with little cash and is dependent on slow-growth markets to sustain its revenues. Additionally, Hershey Trust has a strong grip on the stock in ownership.

The Hershey Company is a manufacturer of chocolate and sugar confectionary products. The company’s product groups include confectionery and snack products, gum and mint refreshment products, and food and beverage enhancers, such as baking ingredients, toppings and beverages. The company manufactures, markets, sells and distributes its products under more than 60 brand names. The Company has five geographic regions operating segments: United States, Canada, Mexico, Brazil and other international locations.

 Email This Story
Join LEAPSInvestor.com