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Private Equity Doesn’t Have A Sweet Tooth (Historically)

While we wait for a Cadbury counterbid that may never come, I ran some data to get an idea of private equity’s historic appetite for sweets.

In the last five years, there have only been 11 US-based LBOs in the candy, confectionary, chewing gum and chocolate sectors, and they’ve all been pretty small (see chart below).

That’s not necessarily for a lack of targets, either. In 2007, Campbell Soup sold its chain of Godiva chocolate stores for $750 million to a strategic buyer. At the time, reports claimed the confectioner received “several” private equity bids, but no firms were called out by name (and I have reason to believe those rumors were planted by the sell side). The company ultimately sold to Yildiz Holding, a Turkish candy company, for much less than the price it originally was reported to be seeking.

But beyond divestitures, the industry is largely consolidated, with players like Mars Inc., Nestle, Barry Callebaut, Lindt and Hershey fighting to eat or be eaten.

Which is why the confectionary world is waiting with bated breath for Hershey (or someone!) to respond to Kraft’s bid for Cadbury Schweppes. It’s been speculated that Hershey would have to join forces with either Nestle or a private equity firm to get in the game, since the company is smaller than Cadbury and its lack of a global footprint would mean hardly any cost savings. A Nestle deal could involve splitting Cadbury’s chocolate and candy assets between the companies, reports suggest.

Of course, it would never be that simple since Hershey’s dealmaking dreams have long been thwarted by its stubborn Trust and Board, which fights to retain a controlling interest in the company despite flat earnings and growth. (Fortunately, Hershey’s lower priced offerings have benefitted from the recession in the past year.)


Download the spreadsheet of 11 candy buyouts of the past five years: Private Equity Doesn’t Have A Sweet Tooth (Historically)