Hershey Open to Possibility of Combination - WSJ

The charitable trust that controls a majority of Hershey's voting rights has reversed its opposition to a possible merger, perhaps opening the way to a combination with Britain's Cadbury Schweppes, the Wall Street Journal said on Saturday.

Cadbury's dairy milk with whole nut chocolate bar.

LeRoy Zimmerman, chairman of Hershey Trust Co., which controls 78% of Hershey's voting rights, told the newspaper that "we have a responsibility to listen to all potential possibilities that might come forward."

He added that "it's important that the Hershey Trust stay focused on keeping the company competitive and profitable." The trust has not had contact with Cadbury, Zimmerman said.

Hershey did not immediately return a call seeking comment.

In 2002, the trust pulled Hershey off the market in the wake of opposition from Pennsylvania officials and community groups who feared plant closures and job losses.

Hershey's market capitalization is about $12.6 billion, while analysts estimate Cadbury's confectionery business, the world's largest, is worth $17 billion, the newspaper said.

Merging the businesses could give a combined company greater power to negotiate with retailers.

Cadbury Chief Executive Todd Stitzer told analysts last week that a merger would make sense because the companies' business complement each other, the newspaper said.

On March 15, Cadbury said it would split its confectionery unit, which includes Dairy Milk chocolate and Trident gum, and drinks unit, which includes Dr. Pepper, 7Up and Snapple.

Hershey products include its namesake Kisses and Reese's peanut butter cups. The company is also rolling out new products such as premium dark chocolate.

The Journal said private equity companies including Blackstone Group, Kohlberg Kravis Roberts & Co. and Lion Capital are interested in bidding for the drinks business, citing people familiar with the matter.

A sale could take place by late summer, people familiar with the matter also said, according to the newspaper.

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