“Hershey recognises that Cadbury is the last major confectionery company potentially available and, as such, is likely to make some response” to Kraft’s $16.73 billion bid for Cadbury PLC, this person said.
What form that response could take is unclear, but Hershey and Cadbury have been through serious flirtations in the past.
Hershey, with a market cap of about $8.8 billion, could have a difficult time financing such a deal. Cadbury’s market cap, after shooting up Monday, is roughly $17.5 billion.
One potential option would be for Hershey to team with Nestle SA, the Swiss food giant, to make a joint bid in which Nestle would take Cadbury’s gum business and Hershey would take chocolate. It is unknown whether Nestle and Hershey have been in talks.
At a media event on Monday, Nestle Chief Executive Paul Bulcke said the company is always “open to acquisition opportunities if they fit strategically.”
If Hershey makes some kind of move for Cadbury, it wouldn’t be the first time the Pennsylvania chocolate maker has tried to pair up with its British rival.
Hershey and Cadbury had talked about a combination for years, but Cadbury’s drinks business always posed an obstacle. In January 2007, Cadbury CEO Todd Stitzer agreed to remove that problem when he sat down in the Ritz-Carlton Grande Lakes hotel in Orlando, Fla., with then-Hershey CEO Richard Lenny and suggested they create a “global confectionery powerhouse.”
Armed with a nearly 30-page presentation, Stitzer also offered to register the company in Delaware, put headquarters in Hershey and maintain a U.S. stock listing. But talks never went anywhere, and by the time Hershey’s controlling shareholder, the Hershey Trust Co., tried to resume talks with Stitzer in late 2007, the climate for doing a deal had chilled.
A dearth of credit had made a sale of Cadbury’s beverage business much less certain, and Hershey’s declining performance made the company look less attractive. Cadbury, however, eventually did hive off the drinks business into a separate company.
Consummating its long-time flirtation with Cadbury would give Hershey broader international scale. But it seems the only way that will happen is if Hershey finds a way to buy Cadbury, because the Hershey Trust has repeatedly refused to cede control of the company in a sale.
“Simply put: We will not sell the Hershey Co.,” Hershey Trust chairman LeRoy Zimmerman said in an opinion piece published last year in the Patriot-News of Harrisburg, Pa.