Hershey said on Thursday it had rejected a $23 billion takeover bid by Mondelez International that would seek to expand the latter's limited U.S. footprint and create the world's largest confectioner.
The snub underscores the challenges Mondelez Chief Executive Irene Rosenfeld faces in wooing Hershey's controlling shareholder, the Hershey Trust, a $12 billion charity created by the eponymous company's founder a century ago.
The maker of Hershey's Kisses and Reese's Peanut Butter Cups saw its shares trade above Mondelez's bid of $107 per share in cash and stock, indicating investors expected a new offer.
A merger of two of the world's top five candy makers would add Hershey's strong U.S. business to Mondelez's global footprint.
Earlier, a source said that Mondelez had sought to provide assurances to Hershey that it would keep its name and preserve jobs. Mondelez sees little antitrust risk given the limited geographic overlap of the two companies' businesses, the source added.
"The board of directors of the company unanimously rejected the indication of interest and determined that it provided no basis for further discussion between Mondelez and the company," Hershey said in a statement.
Hershey shares ended trading on Thursday up 16.8 percent at $113.49, while Mondelez rose 5.9 percent to $45.51.
Mondelez, the maker of Oreos cookies, is the second-largest confectionary company globally, while Hershey ranks number five. Their merger would put them in the top place at 18 percent of the market, according to market research firm Euromonitor International Ltd. The combined company would leapfrog Mars Inc, which has 13.3 percent of the global market.