The Hershey Company's (NYSE: HSY) turmoil continues. After a continued decline in net income and stock price, the board, controlled by various Hershey trusts, announced yesterday its intent to take the steps necessary to reverse the trend.

The company has suffered an unfortunate coincidence of declining sales at the same time it is making a heavy investment in a new plant in Monterrey, Mexico. Ironically, the board killed a potential sale of the company several years ago, partly in response to fears that massive job losses in its American manufacturing plants might result.

Since then, the board has become more aggressive, while maintaining its firm intent to remain in control of the company. The Wall Street Journal's Julie Jargon [subscription] today reviewed the oft-speculated possibility that one of the companies that bid on Hershey's in 2002, Cadbury Schweppes PLC (NYSE: CSG), might split off its candy business and merge it with that of Hershey's. For such a deal to work, however, one of two things need to happen. Hershey could buy that portion of Cadbury Schweppes, which would require it to take on a heavy debt load that would be hard to justify given its recent performance, or the Hershey board will have to change its mind about selling off the business.

Given Hershey's new manufacturing capacity, such a merger makes even more sense in terms of production and logistics. Not coincidentally, the company announced last week that CEO Richard Lenny will retire at the end of the year. Look for the board to hire a new CEO who can find a way to structure such a deal.

Cadbury Schwepps (NYSE: CSG) is trading up 1.5% in early trading today on reports that there are more bidders for its operations than non-mutants have as fingers. The company has been in talks and under plans to split apart the company from a confection and a beverage maker into two separate entities. The US-based beverage unit owns Dr. Pepper and Snapple, and reports in the Daily Telegraph put the value of this alone at 8 billion British pounds, or close to $16 billion in dollar terms.

The talk was that two private equity consortiums are in the lead, but this report states as many as 12 groups might be interested. What is interesting here is that the US-dollar equivalent market cap of the entire Cadbury Schwepps is about $28 billion. Its P/E ratio is also south of 13, which puts it far under peers. Hershey (NYSE: HSY) and Wrigley (NYSE: WWY) trade with P/E ratios north of 20, although that is because of near-term issues, and those numbers are lower if you use a smoothing out basis looking ahead to forward estimates. The same is true on the multiples for Coca-Cola (NYSE: KO) and PepsiCo (NYSE: PEP), which are currently carrying P/E ratios over 20.

Cadbury is on a quest to unlock shareholder value. It has made this known. But what is becoming more and more apparent is that the entire kit and kaboodle may end up just being multiple subsidiaries of other companies.

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.