Hershey said it has no immediate plan to bid for British candy maker Cadbury

Hershey has no immediate plan for Cadbury bid

HARRISBURG, Pa. — Candy maker Hershey said Friday it has no immediate plans to make an offer for British competitor Cadbury, making it all but certain that Kraft Foods Inc.’s $19.5 billion bid will proceed unchallenged.

The Hershey Co., America’s most recognizable name in chocolate, did leave itself room to reconsider within six months if circumstances surrounding the acquisition change significantly.

Hershey’s statement seemed to confirm what analysts widely believed — that the fattened offer Kraft made Tuesday put a winning bid for Cadbury PLC out of Hershey’s reach.

Hershey spokesman Kirk Saville would not comment Friday on why the company dropped out. Hershey, which first expressed interest in Cadbury in November, had three more days to make a formal offer.

The combination of Cadbury and Kraft, the maker of Toblerone chocolate, Velveeta processed cheese and Oreo cookies, would create the world’s biggest confectionary company, edging out Mars Inc. from the top spot.

Kraft, based in Northfield, Ill., now only needs to get the approval of 50 percent of Cadbury’s shareholders, who must vote by Feb. 2, to push ahead with the takeover. While some shareholders had pressed for a higher offer, analysts widely expect the majority to follow the support of the Cadbury board.

Kraft declined to comment on Hershey’s move but reiterated its position that Kraft can deliver more value than any other bidder.

Cadbury declined to comment on Hershey’s announcement.

Not all Kraft’s shareholders are happy with the deal, however. Warren Buffett, whose Berkshire Hathaway Inc. is Kraft’s largest stockholder, has said the purchase would be a mistake. But Buffett, who argued that Kraft is overpaying and using an undervalued stock to do so, said this week he will retain his Kraft shares.

Cadbury shares fell 0.8 percent to 826.5 pence on the London Stock Exchange as analysts downgraded the stock, anticipating Hershey’s exit. That’s below the Kraft bid of 840 pence per share for the maker of Dairy Milk chocolates and Dentyne gum.

Kraft’s offer comprises 500 pence cash and 0.1874 new Kraft shares for each Cadbury share.

By midday in New York, Cadbury’s shares were down 15 cents, trading at $53.68, and Hershey’s stock was up 31 cents, trading at $36.50. Kraft’s were down 17 cents, less than 1 percent, trading at $28.08.

After Hershey’s announcement, Standard & Poor’s analyst Tom Graves lowered his opinion of Hershey to sell from hold. The Kraft acquisition of Cadbury will weaken Hershey’s competitive position in the candy industry and limit its international expansion opportunities, Graves wrote.

Last week, a person familiar with Hershey’s plans had told The Associated Press that Hershey was assembling a bid to acquire the larger Cadbury. But the bid — to be higher than Kraft’s initial offer of $16.5 billion — never saw the light of day.

As well as trumping Kraft’s offer, Hershey would have had to pay a break fee of 118 million pounds, roughly $192.8 million, and undergo a potentially lengthy regulatory review in the United States, given that the two companies already are partners on product licenses.

The Financial Times newspaper said Hershey’s board voted unanimously Wednesday against making a rival offer after Cadbury board’s recommended its shareholders approve the sweetened Kraft offer.

AP Business Writer Michelle Chapman contributed reporting from New York and AP Business Writer Sarah Skidmore contributed reporting for Portland, Ore.