U.S. chocolate giant Hershey is expected to be among the companies submitting an initial bid on Friday for Nestle's U.S. confectionery business, sources familiar with the situation said. The business makes sweets including Butterfinger, Baby Ruth, Sno-Caps and Laffy Taffy.

Lemonheads-maker Ferrara Candy, owned by private equity firm L Catterton, is also expected to put forward an introductory offer, the sources said.

Both will face competition from other buyers, including private equity firms. Nutella-owner Ferrero has been reported to be among those eyeing the company.

Nestle said in June that it would explore strategic options, including a possible sale, for its U.S. chocolate and candy business. The business on the block has annual sales of 900 million Swiss francs ($924 million). It is expected to be valued at $2 billion to $2.5 billion, the sources said.

The sources, who cautioned that companies often make initial bids without submitting a final offer, requested anonymity because the process is confidential. Hershey, Nestle and L Catterton declined to comment.

Hershey, the maker of Reese's, Twizzlers and its eponymous bars and Kisses, is the leading player in the U.S. chocolate and candy industry market, according to Bernstein Research. Adding Nestle's confectionery business, ranked No. 4, would further increase its scale and thus leverage with retailers.

Still, any such deal would mark a change in course for the chocolate giant, which has sought to adapt to changing consumer tastes by moving into healthy categories. As part of these efforts, the company in 2015 bought Krave jerky and has said it is looking to buy more salty snack brands.

Hershey recently appointed Michele Buck as its new CEO, under whom the company has said it is looking to cut costs and improve profit margins. In a recent earnings call, Buck said that scale was an important element to consider in any potential acquisition.

The chocolate company last year rebuffed an acquisition offer from Oreo-maker Mondelez International.

For Ferrara, owner of Red Hots and Now & Later candies, an acquisition of Nestle's business would add more chocolate to its array of offerings, as those who do eat sweets increasingly prefer chocolate to sugar candies.

Nestle, the world's largest packaged foods maker, has been acting to shed underperforming businesses. U.S. activist shareholder Third Point, which has a $3.5 billion stake in the company, is pressuring Nestle to boost returns as demand for its products weakens.