Image Source: The Hershey Co.

What: Shares of chocolate behemoth The Hershey Co. (NYSE:HSY) soared on Thursday following reports that snack giant Mondelez International (NASDAQ:MDLZ) had made a bid to acquire the company. Hershey stock was up 18% at 3:25 PM, while shares of Mondelez had jumped 6%.

So what: Initially this morning, the price offered by Mondelez wasn't disclosed. Hershey issued a press release in the afternoon stating that it had received a preliminary, non-binding indication of interest from Mondelez with an offer price of $107 per share. Hershey's board of directors unanimously rejected this offer.

Hershey owns more than 80 brands, including Hershey's, Reese's, and Jolly Rancher. Mondelez owns the Cadbury brand, and a combination of the two companies would create the largest candy company in the world.

Mondelez's bid is valued at roughly $23 billion, with the company offering half cash and half stock. About 81% of the voting power at Hershey is controlled by the Hershey Trust, making any deal impossible without the trust's approval.

Now what: According to The Wall Street Journal, Mondelez is prepared to make concessions in order to close the deal. The company pledged to protect jobs, locate its global chocolate headquarters in Hershey, Pa, and rename the company Hershey in the event that the acquisition eventually goes through.

It's likely that this story won't end today. Mondelez may increase its bid in an effort to win approval, and other large food companies could enter the fray as well. Any acquirer would be paying a hearty premium for Hershey, which now trades for about 26 times the average analyst estimate for 2016 earnings. But they would be getting in return an extremely profitable company with an iconic brand.

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