- No BS. Just Bullish.
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- No BS. Just Bullish.
No BS. Just Bullish.
Hot Chocolate | Coffee
The Wall Street Skinny
December 12, 2024
This Week on The Floor
Sign up for this month’s FREE live masterclass! Details below:
What: Advanced Excel for Investment Banking
When: Sunday, December 15th at 10am EST
We’ll cover sensitivity analyses (data tables), CHOOSE and OFFSET functions, self-referencing IF statements, and using Macros & data tables to power summary tables.
Register here to reserve your spot!
In the news: Mondelez’s failed bid to buy Hershey
What questions to ask in coffee chats?
Our interview with a former Blackhawk Pilot turned Investment Banker is LIVE on the podcast!
Markets Recap / Deal News
Interviewing this week? Here’s some content for your conversation.
The Hershey Company (creator of the Halloween candy I need to toss out) recently rejected a takeover offer from Mondelez (maker of Oreos, Ritz crackers, Chips Ahoy, and other staples in my house with young kids).
Mondelez has a market capitalization of ~$84bn, and Hershey approximately $35bn. A merger would have created one of the largest global confectioners.
The reason the bid failed to go through is partly due to Hershey’s dual class share structure, which gives The Hershey Trust Company — a charitable trust for the Milton Hershey School — 80% of Hershey’s voting power through its dual class shares. They felt the offer was too low.
This isn’t the first time Mondelez has tried to buy Hershey. They previously offered $23bn for the company in 2016.
Was rejecting the offer a smart move?
Well, pundits are saying there’s no reason for Hershey to do a deal; Mondelez has no leverage to force their hand.
However, Bloomberg pointed out that Hershey does have to contend with rising cocoa prices, while some of their competitors like Mars are being super aggressive in acquisitions (i.e., the Mars acquisition of Kellanova that was announced earlier this year).
Check out our episode on that deal below, and stay tuned for our episode of The Skinny On… this week where we’ll dive into more details and review the circumstances that led to Mondelez’s creation in the first place (a.k.a., past Chocolate wars…):
Interestingly, Mondelez was formed out of a spin-off of Kraft Foods Inc. in 2012, isolating its high growth global snacks business from its mature North American grocery segment.
Now that their bid has been rejected, Mondelez decided instead to announce a $9bn share buyback plan, and a new focus on “bolt-on” deals (going after much smaller fish than a whale like Hershey).
Per Reuters, Hershey’s shares — which were up as much as 19% on Monday following reports of Mondelez’s bid — were down 3.3% on Wednesday, while Mondelez’s stock was up 3.5%.
Potential interview questions:
What is the difference between a spin-off and a split-off?
What do you expect to see more of in terms of M&A activity in the coming year, mergers of larger companies or more bolt-on acquisitions?
What should the impact of a share buyback announcement be on a company’s stock price?
What is the relationship between commodity prices and M&A activity?
For a 30 minute explanation of what’s happening RIGHT NOW, check out our second weekly podcast episode The Skinny On…
What Questions Should I Ask During Coffee Chats?
Hint: it’s not “how does $10 worth of depreciation flow through the 3 statements?”
With coffee chats, you’re building a relationship first.
Show how smart you are, but don’t open with technical questions.
Why?
Because you’ll seem boring.
Use smart questions that open up to more technical/business questions, but which build a relationship bridge to get there.
The best questions are the ones that get people talking about the things they love and that make them happy.
When the person across the table from you feels happy, they are more likely to feel positively about their interaction with you, and it becomes a virtuous cycle.
Elle Woods knew that happy people hire you for jobs
Some examples:
Who were your early mentors? How did you connect with them? How did they help you?
Who was the most successful junior person that you’ve worked with, and what did they do to make such a positive impression?
Who has your favorite client been (or deal that you worked on)?
Whom do you look up to within the company? Within the industry as a whole? Why?
People tend to light up when talking about people they like, and it leads to a much deeper connection.
All of these openers should lead to questions where you can really get in the weeds.
For example, if you get someone talking about their favorite client, you can then ask questions about the specific deals they worked on or trades those clients have done in the past.
If they mention a product or a structure you have some knowledge of or are curious to learn more about, probe deeper.
If there’s an article you’ve read recently about that sector or asset class, loop it in as a follow up question.
Or if someone shares that they bonded with an early mentor over being, say, volleyball players (i.e., insert common interest here), what a great opening to talk about your volleyball career! The more commonalities you can find, the better.
Build a real connection FIRST before you get to anything technical
Some other classic topics:
What do you wish people understood better before starting in your role?
What do you wish you’d known when you were first starting out?
What are you most proud of that you’ve accomplished?
What do you hope to accomplish in the coming year?
What does success look like in your particular role?
Put yourself in their shoes. You’re taking time off from work/family/fitness/life to speak with someone.
What kind of conversation would you want to have? Would you want someone just telling you how amazing they are while you nurse a latte? Unlikely.
You want to build a relationship and discover organically that the person sitting across from you is the kind of person you want to spend more time with in a professional capacity.