Oreo cookie maker Mondelez International Inc. ended its pursuit of Hershey Co. after the famed chocolatier re-buffed its latest acguisition offer, putting an end to a monthslong takeover campaign that would have created the worlds largest candy company.
Hershey last week rebuffed a new bid by Mondelez, thesecond one since June, and indicated it would be difficult to strike a deal before next year because of the shifting dynamics at its controlling shareholder, the Hershey Trust Co., according to people familiar with the matter.
Mondelez said in a statement late Monday there was "no actionable path forward" to buy Hershey, which confirmed that there were additional communications with Mondelez but wouldnt com-ment further.
Mondelezs failure to pull off the takeover, which would likely have been valued at upward of $25 billion, will likely reinforce the notion among analysts and investors that Hershey is unattainable as an ac-quisition target in light of its majority ownership by a trust that for years has been reluctant to sell.
The Hershey Trust, which controls about 81% of Her-sheys shareholder votes, is inthe midst of overhauling its own board of directors following an investigation by state regulators, and investors had wondered if Mondelez would be able to win its approval by striking during a period of uncertainty.
Mondelez Chief Executive Irene Rosenfeld walked away from her goal of creating a snacking and confectionary giant that would benefit from giant global scale and the combi-nation of major brands like Chips Ahoy and Reeses peanut butter cups.
Mondelez initially made a roughly $23 billion bid for Hershey, The Wall Street Journal first reported in June. Hershey rejected the offer, which amounted to $107 a share, half in cash and half in stock.
Ms. Rosenfeld privately indicated to Hershey CEO J.P. Bilbrey last week a willingness to raise the bid to $115 a share, the people familiar with the matter said.
Hershey responded that the starting point for discussions would need to be $125 a share. Hershey also indicated the trust would need to complete a constitution before there could be a deal, and that isnt expected until possibly late next year, some of the people said.
Hersheys stock was off 11% at $99.72 in midday trading Tuesday, while shares of Mondelez rose 3.8% to $44.69.
Hershey, with a namesake hometown in Pennsylvania built by its success, and Deer-field, m.-based Mondelez, both have been under pressure in the U.S. amid a trend toward healthier eating.
Pablo Zuanic of Susque-hanna estimated that had they merged, the combined company would see a sales increase of between 9% and 19%.
Mondelez could have helped Hershey expand overseas while Hersheys IU, chocolate prow-ess had the potential boost Mondelez domestically.
Hershey had $7.4 billion inannual sales last year, while Mondelez towered over it, with $30 billion
Hershey arguably had the most to gain from the hypothetical deal, in that it has been trying to diversify from its largely U.S. candy business, whose products include chocolate Kisses and Jolly Ranchers, to more international markets and new products sold in the broader snack aisle.
Both of those efforts would have been achieved swiftly with an acquisition by Mondelez, Mr. Zuanic noted. If the outcome of the talks with Mondelez were to attract other bidders, they may need to be more patient than Mondelez.
The Hershey Trust, as part of a settlement with state regulators, isnt likely to have a reconstituted board of directors until the end of 2017.
The trust, which oversees billions of dollars for a local, nonprofit school, has agreed to make significant governance changes in response to the Pennsylvania attorney generals office investigation into allegations of excessive compensation and conflicts of in-terest.
"Once a totally new Trust Board is in place, by early 2018, things could be different, but we are uncertain Mondelez will exist in its current form by then," Mr.,Zuanic said in a note to investors earlier this month, hinting at the possibility that Mondelez would go after another smaller rival or become a takeover target itself.
Ms. Rosenfeld said in prepared remarks Monday that while the company was disappointed, it remains focused on efforts to deliver sustainable sales growth and stronger margins. Mondelez will be disciplined in its approach to generating value, including through acquisitions, she said.
Indeed, Mondelez called off the pursuit because the deal was attractive but not essential and because it was eager to avoid overpaying, according to one of the people familiar with the matter.
Mondelez plans to providemore details at an industryconference on Sept. 7.
-Tess Stynes, Dana Mattioliand David Benoit contributedto this article.
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