Hershey pulls out of Cadbury takeover race

US chocolate firm Hershey cleared the way for Kraft's £11.9 billion takeover of Dairy Milk firm Cadbury today after it said it would not make a counter-bid.

Hershey's formal withdrawal from the race comes three days after an improved Kraft bid was recommended by Cadbury's board.

The Oreos-to-Philadelphia cheese maker's 840p-per-share offer is set to end the independent history of the British firm, which dates back to 1824.

Hershey's decision comes after a unanimous board vote by directors against a bid on Wednesday, according to reports.

On Tuesday, the City's Takeover Panel gave the firm a deadline of Monday for it to make an approach or walk away.

The Pennsylvania-based firm - famed for its iconic Hershey bars in the US - had been weighing up its own move but Kraft's improved bid, including a higher cash share, put too much pressure on the company.

Hershey already has a relationship with Cadbury making Dairy Milk and Creme Eggs in the US under licence, and had been seen as the UK firm's preferred choice as a "white knight" before Kraft upped its bid.

Kraft says its takeover will create a "global confectionery leader" - making the combined group world number one in the chocolate and sugar confectionery market and "a strong number two" for chewing gum.

Cadbury employs around 45,000 people in 60 countries, with 5,600 staff at eight manufacturing sites in the UK and Ireland, including a facility in Somerdale near Bristol, which is currently scheduled to close, as well as its Bournville factory in Birmingham.

But Birmingham MPs and trade unions have voiced concerns over the danger to British jobs from a takeover that could saddle the combined company with mammoth debts.

Shareholders in Cadbury have until February 2 to vote on the offer.