US CHOCOLATE COMPANY Hershey has rejected a multi-billion dollar takeover bid from the owner of Cadbury’s chocolate.
It was a deal that would have seen a merger between two confectionery titans, but Hershey rejected the €23 billion (€20.6 billion) bid from Mondelez, which owns Cadbury and other snack food brands like Oreo, Toblerone and Belvita.
Had it been accepted, Mondalez would have surpassed Mars as the leader in the global confectionary sector
The bid would also have seen Mondalez jump far ahead of competitors Nestlé and Ferrero, which are currently in third and fourth place respectively.
The new company would have been a heavyweight on foreign markets and on the American market, thanks to The Hershey Company’s mass-market appeal.
Founded in 1894 in the Pennsylvania city of the same name, Hershey is a fixture in American supermarkets. Its best-known brands include Reese’s Peanut Butter Cups and Hershey’s Kisses.
The Hershey board of directors said it “carefully reviewed” a bid of $107 per share for the company and “determined that it provided no basis for further discussion between Mondelez and the company”.
Mondelez declined to comment on the acquisition move.
Hershey shares soared by 16.8% yesterday, pushing the company’s market value above $24 billion (€21.5 billion) – well above Mondelez’s bid.
The stock jump for Hershey, which has 80 brands, suggests that investors think Mondelez may come back with a higher bid or that rival offers may emerge.
Nestlé in the wings?
Nestlé, which gave Hershey a license to produce Kit Kats in the United States, could also make an offer, analysts said, but a merger might face regulatory challenges.
The Swiss food giant could also terminate its partnership with Hershey, which would reduce the US company’s value.
Hershey reported $7.4 billion (€6.6 billion) in sales in 2015, while Mondelez had $29.6 billion (€26.5 billion).
However, any acquisition deal would require support from the Hershey Trust, created by company founder Milton Hershey.
The trust is chartered by the state of Pennsylvania and holds about 80% of the company’s common shares.
The Hershey Trust has steadfastly opposed a sale of the company in the past, as in 2002 when it torpedoed a $12.5 billion (€11 billion) takeover offer from Wrigley, now a unit of Mars.
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