Nestle 'won't' make $12bn bid

ZURICH, Switzerland -- Nestle Chief Executive Peter Brabeck dismissed as "fantasy" the idea that U.S. anti-trust officials would allow the world's biggest food company to acquire U.S. chocolate maker Hershey Foods.

In an interview with the Wall Street Journal Europe published on Friday, Brabeck declined to flatly rule out a bid if the deal was structured differently. Analysts have valued Hershey (HSY) at about $12 billion.

"Yes, [Hershey] would take me to an end-game situation" as leader in the U.S. chocolate market, "but I'm not sure whether the FTC (Federal Trade Commission) will play, so it's a theoretical question," he told the newspaper.

"Hershey has 43 percent (market share), we have 12 percent. Can you imagine the FTC saying, 'Congratulations! Beautiful!'? I cannot believe the FTC would accept this. It is fantasy to think you would get regulatory approval in the U.S. to combine 43 percent with 12 percent."

Nestle has been considered the front-runner to buy Hershey because the Swiss company has the money and owns the KitKat brand, which it has licensed to Hershey in the U.S..

Cadbury Schweppes (CBRY), the British soft-drink and chocolate company, may team up with Nestle to buy parts of Hershey, the paper said. Cadbury has approached Hershey in the past but its overtures have been rejected.

Brabeck suggested regaining control of KitKat, the chocolate-covered wafer, "would sufficiently change" Nestle's U.S. confectionery position, the paper said.

"I am very relaxed. What I don't understand is why everyone believes I would spend $12 billion. I don't think you would spend $12 billion," said Brabeck.

Asked if Nestle would rule out a bid for Hershey, he said: "We cannot comment with such a clear signal in today's situation. But I just want to underline the fantasy that's in the market. It just doesn't make sense."

Brabeck's comments are the latest from Nestle seeking to play down market talk that it will bid aggressively for Hershey. Industry sources say Kraft Foods (KFT) is also very interested in buying Hershey, whose possible sale has stoked local political opposition.