Ahead of the pre-determined deadline, Kraft (KFT) decided to launch its formal offer for U.K.-based chocolate maker Cadbury (CBY). KFT announced that the cash-and-stock bid is worth $16.46 billion (9.8 billion pounds) or 717 pence per U.K.-listed CBY share.

At that rate, KFT said the bid is 37% higher than CBY's July 3 close. KFT added that no other potential buyer has declared interest in CBY. KFT is offering CBY shareholders $5 in cash and 0.26 share in KFT. For each American CBY share, KFT is offering $20 cash and 1.04 shares.

Halloween, though not the blockbuster holiday that Christmas is, still results in some additional spending on the part of consumers as they stock up on candy and costumes, and maybe take in a scary movie or two. With those treats in mind here are some stocks that may give investors sweet dreams -- and hopefully not nightmares.

As is well known, candy is all the rage at Halloween, and among the largest candy stocks are Hershey Co. (NYSE: HSY) and Cadbury PLC (NYSE: CBY). Last week, Hershey reported third-quarter earnings rose 30% despite weaker volumes affected by higher prices for its sweets. Last year's numbers also included special charges. Still the company said it expects full-year earnings to be ahead of Wall Street forecasts. In 2010, the Pennsylvania company said it expects earnings excluding items to rise 6% to 8%. The stock has a forward-looking price-to-earnings ratio of 16 and a current dividend yield of 3.1%.

Steady-as-she-goes, to cite an old Star Trek phrase, regarding The Hershey Company (NYSE: HSY), which is why I'm reiterating my Buy rating for the company, first recommended on April 23, 2009 at a price of $37.45.

Manufacturing savings, new products, and promising opportunities for revenue growth in international markets, along with demonstrated marketing prowess, point to a bright future for HSY. The company's dual-class capital structure with unequal voting rights is problematic, but not enough to change the overall investment evaluation.

Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and who have a competitive advantage in established markets, preferably with a favorable, global trend as a support. And with the aforementioned in mind, The Hershey Company (NYSE: HSY) is worth a review.

In general, analysts see only modest revenue growth for HSY for FY 2009. However, an improved supply chain should reduce costs, and also free-up more capital for strategic growth initiatives at home and abroad.

Hershey (NYSE: HSY) did a good job in its first quarter of the year. The big confectioner said it earned $0.38 per share on an adjusted basis. According to this news article, that beat the analysts by three solid pennies.

Not only did the bottom line fare well, but the top line didn't do so badly, either. It increased well over 6%. Okay, that's not a rocketing growth rate, certainly, but all things considered, I think it was a decent performance. Hershey benefited from pricing strategies and the Easter holiday. If you ask me, I think the recent rally in the markets helped to bolster consumer confidence. That may have helped Hershey sell a lot of its candy. Management seemed pretty pleased with volume trends and the response to its marketing initiatives, judging by comments made in the release.

Quietly, chocolate companies have been snapping up little makers of organic and fair trade chocolate; Cadbury, PLC (NYSE: CBY) started the trend by buying Green and Black's in 2005, and then Hershey (NYSE: HSY) jumped on the bandwagon, buying Dagoba Organic Chocolate in 2006.

Since then, fairly traded and organic chocolate bars have become more and more popular among consumers; while exact numbers are hard to find, organic chocolate sales have more than quadrupled since 2000 and were $94 million in 2007. Fair trade chocolate sales have been nearly doubling on a year-over-year basis since 2000.

Hershey (NYSE: HSY) reported earnings for the fourth quarter, and investors seemed to think they were rich and delicious. As I was writing this, shares were up 5%. Why were they up so high?

Well, earnings beat estimates. Hershey managed to deliver an adjusted $0.59 per share. Wall Street wanted $0.54, so there you go. Also, that was four pennies better than the previous year's performance. While that was good, it should be noted that Hershey had an overall problematic year, as it saw earnings per share decline a little under 10% to $1.88 per share. Currency changes are hampering sales growth, so Hershey will need to keep marketing activities as strong and efficient as possible. Margins are also being addressed, as management is hunkering down to wring out every conceivable saving in the supply chain.

I remember when Rocky Mountain Chocolate Factory (NASDAQ: RMCF) was a cool stock. Unfortunately, that was then and this is now. The economy is horrible, and it's getting worse. Rocky Mountain is not the company with which to ride the storm out.

The third-quarter earnings report, issued on Thursday, showed terrible data. Revenues declined well over 16% to $6.3 million. Earnings per diluted share took a big drop of 30%, coming in at $0.14. And it doesn't stop there. Comps for franchised outlets dipped over 2%. Same-store pounds of products bought by franchisees dropped 10%. Let's face it, people are cutting back on Rocky Mountain's confections. I'm sure they're delicious, but it just doesn't matter. Rocky Mountain is going to continue to struggle as we make our way through this macro mess. Management points out that the stock does pay a dividend of $0.10 per quarter. That gives a yield, as of Thursday's closing price, of just about 6%.

That's not bad, and I suppose if you're a long-term value investor who has extremely solid patience, you might want to take a look at Rocky Mountain's shares. I mean, we all know that equities are pretty irrationally priced these days. But, would I step in and buy the stock as any sort of defensive position for my portfolio? No way. I think it's headed lower. And besides, if I wanted to step in and buy something related to confectionery pleasures, I'd probably consider Hershey (NYSE: HSY) first. Not only am I a big fan of the Reese's peanut butter cup, but I perceive the portfolio controlled by Hershey to be a lot more valuable in these troubled times than Rocky Mountain's line of products. Let's hope all the Halloween trick-or-treaters out there are gearing up to help out the confection industry at the end of this month by demanding a whole lot of treats. Goodness knows, the market has already had its share of tricks this year.

Disclosure: I don't own any company mentioned; positions can change at any time.

This post is part of our Big Company, Small Town series, featuring large companies and the small towns in which they are headquartered.

One might assume that chocolatier Hershey Company (NYSE: HSY) got its name from the small Pennsylvania town it is located in, population 12,771. However, the truth of the matter is that the company is named after its founder, Milton S. Hershey, and that the town, which was formerly known as Derry Church, was renamed Hershey, Pennsylvania, in 1906 because of the popularity of the chocolate.

Milton Hershey built the milk processing plant he would use to make his milk chocolate in 1896 with profits he made from selling his caramel company, and three years later, in 1899, the "Hershey process" was born. In 1903, Hershey began construction of a chocolate plant in what would later become Hershey, Pennsylvania. The manufacturing plant, which now covers over two million square feet of manufacturing space, is now the largest chocolate factory in the world.

Just as important to the town's prosperity as the chocolate manufacturing plant is Hersheypark, an amusement park that is affiliated with the Hershey Company. The theme park is a huge employer for the town, a tourist attraction, and a branding device for the Hershey brand.

Hershey, Pennsylvania is truly a place where the company and the town have merged into a single identity. While there, you can tour Hershey's Chocolate World, Hershey Museum, and visit Hersheypark, all of which feature the history of both the company and the town, which will be forever intertwined.

Be sure to check out more Big Company, Small Town posts.

Shares of Hershey Co. (NYSE: HSY) have jumped more than 6% on the news of the $23 billion takeover of Wm. J. Wrigley Co. (NYSE: WWY) by Mars Inc. and Warren Buffett's Berkshire Hathaway Inc. (NYSE: BRK.A) as investors bet that the maker of the eponymous chocolate bar won't stay independent for long.

Hershey, though, is a basket case thanks to soaring commodity costs and hopefully the growing interest in healthier eating. That will heighten the pressure on Hershey management to do a deal with Cadbury Schweppes Plc. or find another sugar daddy (pun intended).

The case for a merger between Cadbury and Hershey are pretty compelling as Reuters notes.

"The deal would have clear strategic logic, as Cadbury, the world's biggest confectionery group, lacks presence in the U.S. chocolate market, while Hershey is looking to expand overseas," according to the news service.

During the first quarter earnings conference call, Chief Executive David West sounded upbeat, saying the company was "making progress, while it is slower than we would like, we do see the initial signs of improving marketplace trends." He has high hopes for new products such as the Hershey Bliss. Investors, though, may not be patient.

The Hershey Trust Co., the chocolate company's largest shareholder, has resisted buyout offers in the past from Wrigley and has vowed to keep the company independent. You have to figure that the trust's board will change its tune at the right price.

Candy-making behemoth Hershey (NYSE: HSY) moved under the earnings spotlight this morning to report a (gulp) 65% decline in fourth-quarter profit. The company banked $54 million, or 24 cents per share, compared to a year-ago profit of $153.6 million (65 cents per share). Excluding items related to changes in the firm's global supply chain, the firm would have earned $124.1 million, or 54 cents per share, a penny shy of analysts' consensus estimate of 55 cents.

Sales for the reporting period were virtually flat, at $1.34 billion, narrowly edging past the Street's expectations of $1.31 billion. For all of 2007, HSY sales came in at $4.95 billion, a modest $2.5 million advance from 2006 sales.

Last month, Canadian regulators began an investigation into allegations of price-fixing involving Hershey Co. (NYSE: HSY), Cadbury Schweppes PLC (NYSE: CSG) Mars Inc. and Nestlé SA (VTX: NESN).

Now our own Justice Department is looking into the issue as well. Chocolatiers have been battling with surging dairy prices and there have been allegations that various firms colluded to fix prices. Ontario's Superior Court of Justice has granted search warrants for the above candy makers, but no charges have been filed.

According (subscription required) to the Wall Street Journal, "It isn't clear precisely what the Justice Department is looking into or whether the preliminary inquiry will become a formal criminal investigation. Price fixing can be a serious offense, leading to heavy fines and, in some cases, jail terms for executives."

The legal issues aside, does anyone really think that lack of access to affordable chocolate is a serious problem in the United States? Judging from The US of A's collective waistline, a little price fixing and consumer gouging could do our body mass indexes a bit of good.

Campbell's (NYSE: CPB) has reached a deal to sell Godiva to Turkey's Yildiz Holding for $850 million, about 15 times EBITDA.

This marks the end of a more than 40-year run for Godiva as a subsidiary of Campbell's. During that time, the chocolatier has grown to more than 270 retail locations around the world. Campbell's sought to divest the brand as part of an effort to focus on its core brands, including Campbell's, Pepperidge Farms, and V8. Godiva is different from these brands in that it's higher end and generally distributed more through specialty stores, rather than mass market grocers.

In a press release announcing the deal, Campbell's CEO Douglas Conant said that, "We are very pleased with the value we obtained for Godiva. The sale price reflects the strength of the Godiva business. Godiva is one of the world's leading premium chocolate businesses and is an excellent strategic fit within Ulker's portfolio. The agreement allows Ulker to expand and diversify its portfolio with an elite, global luxury brand and enables Campbell to sharpen our strategic focus on simple meals, anchored by soup, baked snacks, and vegetable-based beverages..."

It's interesting that a Turkish firm emerged as the high-bidder, perhaps further evidence that American companies are not in acquisition mode in the current market.

Campbell Soup (NYSE: CPB) is selling its Godiva chocolate business since too few people want to eat the sweet stuff while they are having a hot bowl of chicken noodle soup. But Starbucks (NASDAQ: SBUX) may think that chocolate and coffee go together.

The Wall Street Journal reports, however, that "should Starbucks indulge in Godiva, which Campbell put up for sale in August, it would be a departure from its modus operandi." Wall Street experts put the price of Godiva at around $800 million.

If Starbucks buys Godiva, it would be a huge mistake. The coffee retailer's shares are near a 52-week low, trading at under $26. They have a 52-week high of more than $40.

The doubts about Starbucks center around its long-term goal of having 40,000 stores worldwide. Investors are concerned that current same-store sales may be too weak to support that kind of expansion. If Starbucks goes into a second business without fixing its first, the company's stock could take another hit.

Godiva may seem like a sweet deal, but all it would do is take Starbucks' eyes off the ball.

Douglas A. McIntyre is an editor at 247wallst.com.

Whoever said, "Don't buy the cow when you can get the milk for free," clearly wasn't working for The Hershey Company (NYSE: HSY). The nation's largest candy maker -- with brands such as Jolly Rancher, Reese's, and Kit Kat under its umbrella -- said rising dairy costs contributed negatively to the company's bottom line.

This morning, Hershey reported third-quarter net income of $62.8 million, or 27 cents per share, a 69% drop from year-ago results. Excluding a restructuring charge of 41 cents per share, Hershey's would have earned 68 cents per share, or 3 cents south of the 71 cents expected on Wall Street.

Revenue fell 1.2% to $1.4 billion, on par with analysts' expectations. For 2007, Hershey now expects to earn between $2.08 and $2.12 per share, down from a prior outlook of $2.25 per share.