There is growing speculation that Nestlé, the largest chocolate confectionery company in the world, is to buy Hershey, which owns the US rights to Kit Kat. The US rights will be extremely valuable to the Swiss company and its option to reacquire the marketing rights to Kit Kat, if control of Hershey changes, could put off other bidders.
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Nestlé is planning to reacquire control of the Kit Kat brand in the US. Kit Kat is one of the best selling chocolate confectionery brands in the world and is owned by the consumer foods giant Nestlé. However, the brand was originally owned by UK company Rowntree, which sold the US rights to Kit Kat to Hershey before it was taken over by Nestlé in 1988.
Hershey is the market leader for chocolate confectionery in the US, with an estimated share of 29.8% of the market in terms of value. However, it is now being offered for sale by its controlling trust. The buying price is expected to be approximately US$12bn. Kit Kat, with 4.2% of the US chocolate countlines market in 2000, would be an extremely valuable brand
for Nestlé, hence its efforts to claim US marketing rights.
Nestlé will not currently comment on speculation that it intends to regain the US rights to the Kit Kat brand by buying Hershey, but a spokesman has confirmed that the Swiss company would “vigorously” seek to acquire US marketing rights for the brand through unspecified means. But under the terms of the deal between Rowntree and Hershey, if there is a change of control at Hershey, Nestlé has an option to reacquire the marketing rights to Kit Kat. It is thought that this might well discourage potential rival bidders from entering the fray.
The other potential bidders for Hershey are Kraft Foods (owned by Philip Morris), PepsiCo, Cadbury Schweppes, and Wrigley – the family-owned chewing gum company. Another possible contender is Mars, however the private confectionery group may be prevented from bidding by anti-trust laws.
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