Mondelez International , the maker of Oreo cookies and Cadbury chocolates, said it was no longer pursuing the acquisition of Hershey , two months after the US chocolate company turned down its $23 billion cash-and-stock bid.

The abandoned deal, which would have created the world's largest confectioner, underscores the grip that the charitable trust, set up by the company's founder Milton Hershey over a century ago to fund and run a school for underprivileged children, has on the maker of Hershey's Kisses and Reese's Peanut Butter Cups.

Hershey rejected a $107 per share acquisition offer from Mondelez at the end of June. An unrelated row between the trust and the Pennsylvania Attorney General's office ensued over the trust's governance, which resulted in a reform agreement being announced at the end of July.

The agreement calls for the trust's board to be expanded from 10 members to 13, and for five members to resign in order for 10-year terms to be enforced. One trustee resigned last month, leaving a total of nine openings.

Mondelez's Chief Executive Officer Irene Rosenfeld approached Hershey Chief Executive John Bilbrey again last week, and indicated that Mondelez would be willing to offer up to $115 per share for Hershey, according to a source familiar with the discussions who asked not to be identified because they were confidential.

Hershey responded that the trust would not be able to consider an offer until it is reconstituted next year, the source said. Even then, Hershey would not be willing to enter into deal negotiations for an offer of less than $125 per share, the source added.

Hershey did not respond to a request for comment. Its shares fell 11.4 per cent in after hours trading in New York on Monday to $99.00.

"Following additional discussions, and taking into account recent shareholder developments at Hershey, we determined that there is no actionable path forward toward an agreement," Rosenfeld said in a statement.

The Hershey trust holds 81 per cent of the company's voting stock, and so a sale is not possible without its approval. About two-thirds of its $12 billion in assets are in Hershey stock.

Mondelez's offer was half in cash and half in stock, sources have said. That means new board members of the trust, which must approve any sale of Hershey, could use such a transaction to substantially reduce its exposure in Hershey by partially cashing out on its stake.

"While we are disappointed in this outcome, we remain disciplined in our approach to creating value, including through acquisitions," Rosenfeld said on Monday. – Reuters