Hershey Reportedly in Merger Talks With Nestle

Swiss food group Nestle and US-based confectionery firm Hershey are reportedly in talks involving either a merger or a stake sale, said the Telegraph.

According to reports, Nestle plans to purchase 25% of Hershey now and acquire the remaining 75% within a period of two years.

It is learnt that Hershey has engaged JP Morgan for this purpose and that Nestle is a potential buyer. The newspaper also maintained that if a deal does take place between Nestle and Hershey, UK-based Cadbury will find itself alone at a time when the confectionery industry is rapidly consolidating on a global scale.

In the first half of 2008, Mars acquired Wrigley for $23 billion. This deal pushed Cadbury to the second place in terms of confectionery production. It was then expected that Cadbury will try to buy Hershey thus spreading its presence to the US as well.

Reuters has quoted William Lefkowitz, an options strategist at brokerage firm vFinance Investments, as saying: “There are takeover rumors circulating on Hershey once again. As in the past, investors are aggressively buying calls in the company on hopes that the shares will go higher.”