Kraft (KFT) makes a bid for Cadbury (CBY) offering a 31% premium to the market price and shares of Hershey (HSY) go just about nowhere?

On the day of the bid Hershey shares rose all of 1.3% or 50 cents a share.

That doesn’t seem right,does it?

Kraft is making a bid for one of the few candy-makers big enough to give the company a huge step up in global market share. If Kraft succeeds in buying Cadbury–and so far Cadbury is saying that the bid is way, way too low–the company would wind up with 14.8% of the global confectionary market, putting it in a dead heat with privately-held Mars.

That would leave Nestle (NSRGY) trailing badly in third with just 7.6% of the global confectionary market.

Looking around for an acquisition to enable it to play quick catch up, Hershey with its 4.8% market share is just about the only candidate available to Nestle.

So shouldn’t the market have bid Hershey higher yesterday?

I don’t think so. I think, in fact, that the stock market got it just about right.

Acquiring Hershey would be a tough deal since so much of the stock is controlled by the family trust.

But that’s not the main reason the stock doesn’t deserve a big acquisition premium. Cadbury is so attractive to Kraft because it gives the company a way to expand beyond the saturated U.S. candy market and into the United Kingdom and continental Europe where Cadbury is comparatively strong and Kraft comparatively weak.

Buying Hershey, however, would give Nestle a bigger piece of a U.S. market that is growing at an annual rate well below the company’s own internal growth target.

Nestle has recently gotten the growth religion after too many years of growing far too slowly because the company owned too many underperforming brands. It has been shedding brands and moving to focus on being a bigger player in fewer markets.

Acquiring Hershey would be a step backward for Nestle in the eyes of many investors. If you own Nestle, it’s a deal you hope the company doesn’t make.