Mondelez takes a majority stake in Undercover Snacks

What happened

Mondelez International became a majority investor in Undercover Snacks, a better-for-you snack company making chocolate and frosted quinoa crisps. Undercover products are non-GMO and certified gluten-free, made in a peanut-free and tree-nut-free facility in East Hanover, New Jersey. The company will keep operating as a standalone business led by its existing management team.

Confirmed

Global impact / market context

Buying a majority stake gives Mondelez a fast way to add a growing snack brand rather than build one internally. Undercover gains Mondelez's resources to speed up innovation and distribution, which could lift revenue, while Mondelez adds products aimed at health-conscious shoppers.

Analyst inference

Undercover is sold in more than 25,000 retail locations and on United Airlines flights, showing it already has broad reach across grocery, mass, club, drug and online channels. A large food company investing in a smaller health-focused brand signals continuing consolidation in the snacks industry.

Analyst inference

What to watch

1. Undercover will continue to operate as a standalone business led by its existing management team, while gaining access to Mondelez's capabilities, resources and expertise to accelerate innovation, distribution and long-term growth. Confirmed
2. Watch whether Mondelez uses its distribution power to place Undercover products in more stores and channels, since wider shelf space could raise sales and revenue for the brand over time. Proposed
3. Watch for details on the stake size and price, which are not given, because the amount paid and any debt used would affect Mondelez's cash available, costs and reported profit. Analyst inference

Evidence

• seekingalpha.com