Citi Calls Hershey Takeover An 'Unlikely Event'

Hershey (HSY) shares traded higher last week amid chatter of an unsubstantiated report regarding a potential takeover of the company by Nestle (NSRGY), Citi analyst David Driscoll tells investors in a research note. Unique company-specific factors, mainly the control of the Hershey Trust and Pennsylvania law, make a takeover of Hershey by any company an "unlikely event," Driscoll contends.

"The multitude of stakeholders involved would have to be perfectly aligned for any potential transaction, which to us seems like a large challenge to overcome," he writes.

The analyst sees others in the Food Manufacturers space, namely Kellogg (K), General Mills (GIS) and Mondelez (MDLZ), as more likely takeover targets. Driscoll keeps a Buy rating on Hershey with a $102 price target. The chocolate maker closed yesterday up 95c to $96.58. The Fly on June 9 attributed the intraday move higher in Hershey shares to takeover speculation.