Hershey drops bid for Cadbury

HERSHEY, Pa. - Candy maker Hershey Co. said today that it has no plan to bid soon for British competitor Cadbury L.L.C., making it all but certain that Kraft Foods Inc.'s $19.5 billion bid will proceed without competition.

The Hershey Co., which had three more days to make a competing bid, left itself room to reconsider later, however.

The company, maker of Hershey's Kisses, Reese's peanut butter candies and other confections, said it is reserving the right to participate in a Cadbury offer within six months if some conditions are met.

In order for Hershey to make an offer or be part of one in that time frame, Cadbury's board must approve of such action - assuming Kraft's bid has not become wholly unconditional. Hershey also may make an offer if a third-party bid comes in, if a reverse takeover is announced or if there is another material change of circumstances.

Hershey, which had offered little comment since its name surfaced several months ago as a possible suitor for the British confectioner, offered no other comment this morning on its decision.

If the Kraft deal goes through, it would create the world's largest candy company. Kraft, based in Northfield, Ill., boosted its offer for Cadbury by 9 percent to $19.5 billion on Tuesday.

The combined company would have 40 major candy and gum brands and more than $50 billion in annual revenue. It would edge out Mars Co. from the top of the candy industry.

The takeover also would broaden open opportunities globally for Kraft to sell its other snacks. Kraft, the world's second-largest food company overall, makes Oreo cookies, its namesake cheese, and other packaged foods.

Shareholders of Cadbury, which makes Cadbury Dairy Milk, Trident, Dentyne, Bazooka and other products, are expected to approved the Kraft offer by the Feb. 2 deadline. The deal is expected to close next month.

Hershey shares were up 1.16 percent (42 cents) to $36.61 shortly after trading opened this morning on the New York Stock Exchange. Shares of Northfield, Ill.-based Kraft were down 22 cents (0.78 percent) to $28.02.

Cadbury's American depositary shares on the New York Stock Exchange had shed 36 cents and were trading at $53.48. Cadbury dropped 5 peace to 828 peace at 2:06 p.m. in London today, Bloomberg News reported.