Mondelez International is walking away from takeover discussions with Hershey after its $23bn bid was rejected by the chocolate maker.

Seeing “no actionable path forward toward an agreement”, Mondelez has ended talks over a merger, according to a statement from the Oreo and Cadbury’s eggs maker on Monday. Hershey’s board had said on 30 June that it unanimously rejected Mondelez’s $107-a-share bid. Mondelez later boosted its offer to $115 a share before abandoning discussions, according to a person familiar with the situation.

The announcement sent Hershey shares down as much as 12 per cent to $98.06 in late trading in New York. The stock had climbed 25 per cent this year through to Monday’s close, with most of that gain coming when news of Mondelez’s approach became public.

“Combining our two iconic American companies would create an industry leader with global scale in snacking and confectionery,” Irene Rosenfeld, chief executive, said in Monday’s statement. “While we are disappointed in this outcome, we remain disciplined in our approach to creating value, including through acquisitions.”

The merger would have transformed Mondelez into the world’s largest sweet maker and given it a bigger share of the US market – a weak spot for the snack giant. Hershey generated almost 90 per cent of its revenue in North America last year, with the majority of that coming from selling chocolate in the US. Mondelez, meanwhile, has suffered from currency fluctuations and slowing overseas economies.

“The strategic fit with Mondelez was pretty compelling,” said Bloomberg Intelligence analyst Ken Shea. “Not a lot of other companies can do that kind of combination.”

But Hershey, which is controlled by a non-profit trust, spurned the cash-and-stock offer. The chocolate maker said in June that its board “determined that it provided no basis for further discussion between Mondelez and the company”.

Hershey had indicated that price discussions would need to start at $125 a share, said the person with knowledge of the matter, who asked not to be identified because the talks were private. The Wall Street Journal previously reported on the negotiations.

Investor Relief?

Ending the pursuit brought some relief to Mondelez investors, who may have been concerned about a takeover battle. Shares of the Deerfield, Illinois-based company rose as much as 3.6 per cent to $44.60 after the announcement.

The Hershey Trust, which runs Hershey Entertainment & Resorts and operates the Milton Hershey School, controls about 81 per cent of the chocolate company’s voting shares. The organization has scuttled past efforts to sell Hershey, but it’s now in flux.

After facing accusations of lavish spending in recent years, the $12bn charity reached a deal in July with the Pennsylvania attorney general to reform its management practices. That agreement called for three board members to retire by the end of the year, with two more to step down by end of 2017.

Mondelez offered concessions to the takeover target, such as maintaining jobs and keeping the combined company in Hershey, Pennsylvania.

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The new entity also would have taken the Hershey name. But the trust remained a barrier to a deal. Hershey didn’t want to even consider a transaction with Mondelez until the charity’s board is reconstituted next year, another person familiar with the situation said.

The failed talks may also deter other suitors, Shea said.

“People who may have been interested will look at what just happened and be more sceptical that they can get a deal done,” he said. “I think this will have a dampening effect on potential offers for Hershey.”