As always said, the expected Kraft-Cadbury deal will trigger further changes in the confectionery world. One of such speculations is that Swiss food group Nestlé is likely to set itself a long-term goal to buy Hershey , hoping that market pressures after the Kraft-Cadbury deal will wear down opposition from the controlling Hershey Trust.

It is argued that after Kraft and Cadbury merge, Hershey's main U.S. market will become more competitive and as being  a pure confectionery player, Hershey will be more exposed to commodity costs like cocoa and sugar than wider ranging groups.

Analysts believe that a deal for Hershey could be secured at around $10-11 billion plus a $2 billion debt take-out. This means a multiple of 14 times EBITDA  compared to the Kraft-Cadbury deal agreed at 13 times EBITDA.

Since 85% of Hershey's  sales generate from US market, it will not be wrong to say that Hershey will be under Kraft attack with Cadbury products in  its home market. Although the controlling trust has strong power  to say "no" to any deal, as it had happened when Wrigley wanted to acquire Hershey in the past, in current circumstances  to convince the trust might be easier.

From Nestlé point of view, such a deal will not bring any anti-trust concerns, moreover it will help Nestlé to take back the licence of Kİt Kat which is still under posession of Hershey. Hershey had taken Kit Kat and Rolo licences from Rowntree, the British Chocolatier before Rowntree was acquired by Nestlé. If such an acqusition happens Nestlé may gain the long pursuedmarket share in US chocolate market .

Based on the story appeared in Flex-News