US confectionery maker Hershey has rejected a bid of US$23bn from fellow confectioner Mondelez, at a time where both companies are experiencing declining sales.
Mondelez sent a letter of intent to Hershey, which it rejected on Thursday. Hershey said in a statement: “The board of directors unanimously rejected the indication of interest and determined that it provided no basis for further discussion between Mondelez and the company”.
A merger deal would have created the world’s largest confectionery producer that would have seen the combination of Hershey’s chocolate brand with the Mondelez Oreo and Cadbury brands. Hershey currently has the distribution rights to Cadbury in the US, for which it pays royalties to Mondelez.
Reuters estimated the value of Hershey to be around US$27bn; however, Hershey said the letter included other non-monetary considerations.
Reuters also reported a source as saying Mondelez had sought to provide assurances to Hershey that it would keep its name and preserve jobs, adding that Mondelez sees little antitrust risk given the limited geographic overlap of the two companies' businesses.
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