Cadbury and Hershey - Is a Chocolate Romance in the Offing?

03 April 2007

HERSHEY, Pennsylvania: Two global chocolatiers, Hershey and Cadbury Schweppes, both founded by 19th century entrepreneurs with a belief that philanthropy and worker welfare were on a par with profit, are reportedly eyeing each other with more than hint of the hots.

Says LeRoy Zimmerman, chairman of the charitable trust that controls 78% of the voting rights for Hershey: "We have a responsibility to listen to all potential possibilities that might come forward. It's important that the Hershey Trust stay focused on keeping the company competitive and profitable in this global economy."

While in London, Cadbury ceo Todd Stitzer (pictured above) told analysts a merger with Hershey would make sense because the two companies' businesses are "highly complementary".

Were such a marriage to be consummated, Cadbury would be the dominant partner, its confectionery business commanding a market capitalisation of around $17 billion (€12.71bn; £8.64bn) compared with Hershey's $12.6bn.

It is unlikely that nineteenth century philanthropic philosophies of worker-welfare will dominate the couple's pre-nuptial pillow talk.

More likely this will focus on the welfare of professional investors - to say nothing of economies of scale and shared marketing and production facilities across the globe.

Meantime, as the chocolate soldiers explore common ground, private equity Lotharios continue to circle Cadbury Schweppes' beverages business. Among the serial suitors are Lion Capital, Blackstone Group and Kohlberg Kravis Roberts.

  • Meantime, in the the UK Cadbury's newly launched chewing-gum brand Trident has grabbed a 15% share of the nation's £240 million pavement-polluting market just weeks after throwing down the gauntlet to Wrigley - which until the advent of Trident held 98% of the UK gum sector.

    The latest data from ACNielsen show Trident leapfrogging most of its rivals to become the No 2 brand in the market, overtaking Wrigley's Airwaves and boosting gum-chewing across the nation.

    The instant success of Trident comes despite - or more likely because of - the brand's controversial £10m Mastication for the Nation ad campaign, created by JWT but banned last month by the Advertising Standards Authority on grounds that it was "racially offensive".

    Some opine that incomprehensibility is a more valid reason for the prohibition. But judge for yourself by clicking here.

    Data sourced from Wall Street Journal Online and The Times (UK); additional content by WARC staff