Cadbury owner Mondelez has scrapped its pursuit of rival Hershey to create the world’s biggest chocolate company after failing to sweeten its $23bn (£17bn) offer enough to tempt its target to do a deal.
The failure has highlighted the power Hershey’s charitable trust wields in rebuffing unwanted interest. The trust, which controls 81pc of the company’s voting rights, was set up by Hershey’s founder more than a century ago to fund a school for underprivileged children.
Mondelez’s initial $107 per share offer was rejected in June before chief executive Irene Rosenfeld approached her opposite at Hershey, John Bilbrey, last week. She is said to have shown a willingness to raise the offer to $115 a share.
However, reports suggest that Hershey was not willing to consider a bid of less than $125 a share and was unwilling to talk while its charitable trust’s rules were being renegotiated.
Since reports of Mondelez’s bid interest surfaced two months ago, Hershey shares have been trading 20pc higher at around 111p, however they are expected to fall heavily when New York markets react to the deal’s collapse.
Ms Rosenfeld said that the Mondelez board was “disappointed with the outcome”, but decided there was “no actionable path toward an agreement”.
“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,” she said in a statement.
Jack Skelly, food analyst at Euromonitor, said: ““This will be bitterly disappointing for Mondelez and potentially embarrassing given the amount of publicity the proposed takeover generated. Given the infamously murky workings of The Hershey Trust, Mondelez must have been confident going in that they could be successful in their bid.”
Ms Rosenfeld shot to prominence in the UK after spearheading Kraft’s hardball negotiations with Cadbury. She gained notoriety for refusing to attend a Westminster inquiry into Kraft’s failure to keep its promise that it would keep the Bournville factory.
The £11.5bn, which was widely criticised as an example of British weakness in defending homegrown companies from unwanted advances, led to a rewriting of UK takeover rules.
During the takeover saga, Hershey and the Italian maker of Nutella, Ferrro, plotted to trump Kraft with a joint bid for Cadbury, but the complicated ownership structures at the two companies put a deal out of reach.
Hershey, which makes 90pc of its revenues in North America, has owned the rights to produce an American version of Cadbury’s chocolate since the late 1980s, and last year launched a legal battle to block the import of British Cadbury chocolate, which is less sweet.
The move triggered a huge outcry from British expats in the US and prompted a Vanity Fair article to suggest that chocoholics could stage a Boston Tea Party in reverse, hurling Hershey products into New York’s Hudson River.