US-based confectioner Hershey threw in the towel yesterday and said that it had no plans to make a counter-bid for Cadbury after its bigger rival Kraft Foods revised and raised its offer for the British confectioner.

In a statement yesterday, the Pennsylvania-based confectioner said, ''The Hershey Company announces that it does not intend to make an offer for Cadbury'' after it found that the revised bid by Kraft of 840 pence per share, and a 10 pence dividend, was too high for it to match.

Analysts believed that Hershey may come up with a counter offer as it had evinced interest in Cadbury last November in a move to expand beyond its home market (See: Hershey reportedly mulling $17 billion solo bid for Cadbury).

A merger with Cadbury would have helped Hershey expand into developing markets like India and Russia.

This week, after four months of putting a valiant struggle to thwart the world's second largest food and beverage company Kraft Foods $16.7-billion hostile takeover, the iconic 186-year old London-based Cadbury finally gave up its struggle to remain independent after Kraft raised its takeover offer to $19.6 billion. (See: Cadbury finally falls to Kraft's sweetened bid)

The Hershey board of directors voted unanimously against making a counter offer late Wednesday night and made the announcement the following day since it was required to either announce a firm intention to make an offer or that it does not intend to make an offer for Cadbury under the UK Takeover Panel rules by 7 am on 25 January.

Although the Hershey Charitable Trust, which controls 77 per cent of Hershey's voting stock and 31 per cent of common stock had given its consent after holding internal debates with the top executives of Hershey led by chief executive, David West to make a counter offer last week, many analysts doubted the financial firepower of the company to outbid Kraft.

Hershey, which holds $1.5 billion in long-term debt, $119 million in cash as of 4 October 2009 and had $5.13 revenue in 2008, would have found it difficult to make a solo bid for Cadbury unless it tied up with Nestle of Switzerland or Italy's Ferrero.

In the beginning of this month, Nestle had ruled itself out, while although Ferrero, still in the race, Kraft's sweetened bid has put Cadbury beyond its reach and is likely to withdraw formally as a counterbidder before a UK Takeover Panel deadline for counteroffers expires on Monday.

Shareholders of Cadbury are expected to approve the Kraft offer by the 2 February deadline. The deal is expected to close next month.

  The combined company would have 40 major candy and gum brands and more than $50 billion in annual revenue. It would edge out Mars Inc., which has annual revenues of $30 billion, from the top of the candy industry.

The statement was issued following Hershey's announcement on November 18, 2009 that it was reviewing its options with respect to a potential offer for Cadbury.

The UK Takeover Panel issued a ruling that by Monday, 25 January, Hershey was required to either announce a firm intention to make an offer for Cadbury or announce that it does not intend to make an offer for Cadbury.

As on 22 January, the company's market value was about $8.5 billion, less than half of Cadbury's roughly $18.2 billion valuation and a fraction of Kraft's $40.1 billion value.

Hershey held 4.6 per cent of the global confection market in 2008, according to Euromonitor International. Closely held Mars held 14.5 per cent. Cadbury had 10.2 per cent and Kraft 4.7 per cent.

Among the company's considerations was holding onto its investment-grade credit rating, as well as preventing an over-dilution of its shareholders, especially the Hershey Trust.

Hershey was the biggest US confectioner until 2008, when Virginia-based Mars acquired Wm. Wrigley Jr. Co. for $23 billion.

Hershey, founded in 1894 by Milton Hershey, and now run by the tight-knit Hershey Charitable Trust, is North America's leading manufacturer of chocolate and non-chocolate confectionary and chocolate-related grocery products. Some of its most well known chocolate brands include Hershey's Kiss, Kit Kat, and Reese's Peanut Butter Cups.