Mondelez To Invest In Mexican Factory Cut 600 US Jobs

DEERFIELD, IL -- Mondelez International said it will slash 600 jobs in Chicago after opting to upgrade production lines at its new plant in Mexico.

The maker of Oreo cookies and Ritz crackers said it will spend $130 million to install four state-of-the-art lines in Salinas, Mexico.

"This new investment is part of our ongoing supply chain reinvention plan, as we implement several initiatives around the world to transform our global manufacturing processes to accelerate growth, reduce costs and improve productivity," said Mondelez executive vice-president of integrated supply chain Daniel Myers.

Mondelez officials said the Chicago facility will remain open, with upgrades planned for the future.

Meanwhile, billionaire activist investor William Ackman's hedge fund has reportedly built a stake worth about $5.5 billion in Mondelez International. Pershing Square Holdings Ltd said it intends to notify the Securities and Exchange Commission that it holds a 7.5% stake in Mondelez, according to news reports.

The Wall Street Journal recently reported that Ackman wants the snack giant to speed up its revenue growth and cut costs or sell itself to a rival. Citing people close to the matter, the Journal said the newly formed Kraft Heinz Co. or PepsiCo Inc. could be potential buyers for Mondelez.

In 2012, Mondelez spun off its grocery business into Kraft Foods Group, which merged with H.J. Heinz Co earlier this year to form Kraft Heinz.

Another key activist investor is Nelson Peltz, whose Trian Fund Management LP holds a 3% stake in Mondelez. Peltz is on Mondelez's board and played a role in the breakup of Kraft into Kraft Foods Group and Mondelez. He said in April that he wanted Mondelez to continue improving its profit margin, sales and market share.

Mondelez topped second-quarter estimates in late July, as it continues to cut costs and invest in factory production abroad. It also raised its share buyback plan by $6 billion.

In addition to its latest investment in Mexico, Mondelez has been investing in new factories in Russia and Bahrain and recently merged with European coffeemaker D.E Master Blenders to create Jacobs Douwe Egberts.