Confectionery maker Hershey Foods on Monday was downgraded to "neutral" from "buy" by Merrill Lynch, which cited concern that a sale of the company could prompt Hershey to give up powerful licensed brands such as Kit Kat chocolate bars.
Merrill said it initially valued the transaction at $13 billion (€13.3m) to $15 billion, but its valuation was based on all brands staying with Hershey. Relinquishing control of the Kit Kat brand back to Swiss giant Nestle could drop the price of the deal by $1 billion, the firm said.
"On a risk/reward basis, we think this is a time to stay on the sidelines," wrote Merrill Lynch analyst Leonard Teitelbaum of the downgrade.