Should I participate Hershey's takeover?

Shares of $Hershey(HSY)$ oared 11% on Monday after Bloomberg reported that $Mondelez(MDLZ)$ is evaluating a potential takeover of the chocolate maker and has made a preliminary offer.Of course, the deliberations are in the early stages, and it's uncertain whether the talks will lead to a deal.

Interestingly, back in August, $Kellanova(K)$ was bought by Mars at a premium, and at that time there were also bids from MDLZ, as well as HSY, $Pepsi(PEP)$ and other food giants.

Now MDLZ wants to buy HSY, and it feels like it's very intent on doing so!

How is this case likely?

1. This isn't the first time MDLZ has made a solicitation for HSY; in 2016, HSY turned down MDLZ once before, at least in part because the HSY Trust (a charitable trust with voting rights) opposed the deal.

2. HSY has a dual closed stock structure consisting of common stock and Class B common stock, which is not publicly traded and is primarily held by the Hershey Trust (which controls approximately 80% of the voting power) and has 10 votes per share, giving the Trust "substantial" control over corporate decisions;

3. HSY is in Pennsylvania, and under local law, the state attorney general can intervene and petition the court if a transaction causes the trust to lose voting control;

Should I participate?

1. Currently MDLZ market capitalization of 82.2 billion U.S. dollars, HSY's market value of 39.2 billion U.S. dollars, basically half, and MDLZ pocket cash is only 1.5 billion U.S. dollars (more liquid assets are inventory), so it is impossible to cash acquisition, that is to say, can only be exchanged for shares, the share price of MDLZ will be under pressure.

2. More importantly, if it is not a cash acquisition, the premise of arbitrage is to short the acquirer's shares to realize the "eat the difference", but shorting has many uncertainties.

3. Even if you simply Sell PUT/CALL the acquired stock, you may lose money due to the volatility of the acquirer's stock.

4. Of course, there may be third parties in the mix, such as whether Mars and PEP will renew their interest in acquiring HSY, PEP has a big family and may be able to cash in, and it is difficult to know Mars' cash flow without being listed, but the inclusion of multiple parties may boost the acquisition price.