The combined entity would be the world's largest confectionary company
The board of Hershey, one of America’s largest chocolate producers, has rejected a $23bn bid by Mondelez, owners of the competing British chocolate manufacturers, Cadbury.
In its letter of offer, Mondelez based in Illinois, tried to sweeten the deal by pledging to use the Hershey name for the combined new group and to preserve the Pennsylvania company’s distinct corporate culture and local jobs
A combination of Mondelez, which also makes Oreo biscuits, and Hershey would control close to 20% of the global confectionery market.
"The board of directors of the company unanimously rejected the indication of interest and determined that it provided no basis for further discussion between Mondelez and the company," Hershey said in a statement.
Mondelez is the second-largest confectionary company in the world, trailing Mars.
Hershey is the fifth biggest, but a merger would put the new combined entity in top place.
There is wide speculation that Mondelez will come back with an improved offer - but it is unclear if the Hershey's board will be swayed.
Reuters reports that Mondelez anticipates little antitrust risk it a deal is agreed, as there is little geographical overlap between their interests.