Nestle Linked to Hershey Swoop

Speculation has been rife for years that Cadbury, which is now demerged from its beverage business would try to merge with Hershey in order to boost its US presence, but Nestle may be beating Cadbury to it now.

25/09/08 Rumours continue to circulate that Nestlé has been in talks with US confectionery company Hershey to acquire a stake in its business. Hershey is the largest North American manufacturer of chocolate and sugar confectionery with revenues of nearly $5 billion.

The news sparked a 4.4% rise in Hershey shares New York trading following an original report in the Daily Telegraph on Tuesday. According to the newspaper Nestle may buy a 25 percent stake and an option to acquire the remaining 75 percent in two years. Hershey has reportedly been working with investment bank JP Morgan on a transaction and Nestlé has been lined as the potential buyer, according to market sources. When asked by FoodIngredientsFirst this morning Nestle spokesperson Nina Backes refused to comment on the market speculation.

Nestle has been linked to a Hershey merger for years, with the Swiss giant understood to have approached Hershey when the trust controlling the company put it on the market in 2002. Speculation has been rife for years that Cadbury, which is now demerged from its beverage business would try to merge with Hershey in order to boost its US presence, but Nestle may be beating Cadbury to it now.

The news comes in an environment of high consolidation in the confectionery industry. Back in April, Mars acquired Wrigley, the world’s largest chewing gum producer for $23 billion. The two companies together are expected to generate sales in excess of $27 billion and thereby overtake Cadbury as the world’s largest confectionery company.

by Robin Wyers