Cadbury owner pulls out of major US acquisition

CADBURY owner Mondelez International has pulled out of its attempt to buy US rival Hershey after its offer for the confectioner was rejected.

Mondelez had tabled an offer in June of $23bn (£18bn) for the confectioner which would have given it control of some of the world’s biggest chocolate brands.

Hersheys had valued the business much higher than Mondelez was willing to offer.

Mondelez chairman and CEO Irene Rosenfeld said additional discussions between the two parties had shown no “actionable path forward” and therefore Mondelez was ending its interest.

“As the world’s leading snacking company, we remain focused on successfully executing our strategy to deliver both sustainable top-line growth and significant margin expansion and are well-positioned to continue to deliver value to our shareholders,” she said.

“Our proposal to acquire Hershey reflected our conviction that combining our two iconic American companies would create an industry leader with global scale in snacking and confectionery and a strong portfolio of complementary brands.

“Following additional discussions, and taking into account recent shareholder developments at Hershey, we determined that there is no actionable path forward toward an agreement.  While we are disappointed in this outcome, we remain disciplined in our approach to creating value, including through acquisitions, and confident that our advantaged platform positions us well for top-tier performance over the long term.”

The attraction of Hershey was an obvious one for Mondelez, a subsidiary of Kraft, as it would have given it access to its massive supply and distribution chain. It would also offer opportunities to cross-sell some of the chocolate brands and possibly raise the Cadbury profile in the massive US market.

Hershey is controlled by a charitable trust, which is the company’s main shareholder. The charity, thought to be worth around $12bn, was created by the firm’s founder in 1894 and is further evidence of the philanthropic attitudes which characterised Victorian confectioners and is closely aligned with Cadbury’s own Quaker origins.