Nestlé Targets Hershey in Bid to Regain Top Kit Kat Brand

06 August 2002

Frontrunner in the battle to acquire US chocolate and candy giant Hershey [WAMN: 29-Jul-02] is the world’s largest food company, Nestlé of Switzerland – although it has yet to declare its hand.

But Nestlé isn’t just going for growth – insiders say its prime motivator is the US marketing rights of its world-leading chocolate brand Kit Kat. These were assigned in perpetuity to Hershey by original manufacturer Rowntree of England before its acquisition by the Swiss leviathan in 1988.

Interestingly, Hershey and Rowntree not only shared a mutual interest in chocolate. Both were controlled by philanthropic family trusts, although the British trust ceased to control the Rowntree company when it sold out to Nestlé.

But the canny Brits slipped a poison pill into the small print of the Hershey deal: the Kit Kat rights would revert on demand to Rowntree or its successors should control of Hershey ever change hands.

The pill removes much of the candy coating from the acquisition of Hershey by any company other than Rowntree or its successor Nestlé, Kit Kat being second only to the eponymous Hershey bar in the US company’s brand portfolio. And whether it not it makes a bid for Hershey, Nestlé has already declared publicly its “vigorous” determination to regain Kit Kat.

So the amount of cash slapped on Hershey’s table by the other contenders – thought to include Kraft Foods; Cadbury Schweppes of the UK; PepsiCo; and US chewing gum business, Wrigley – is not the only factor in a bidding battle that is predicted to run as high as $12 billion (€12.28bn; £7.71bn).

Data sourced from: Financial Times; additional content by WARC staff