Sponsored by
Nestle may join the bid battle for Cadbury's
CADBURY shares hit a fresh two-year high yesterday on hopes of a takeover battle as reports suggested Swiss food group Nestle is considering entering the fray.
Kit Kat and Aero maker Nestle is said to be considering its options, which could see it put forward an offer to rival the hostile 9.8bn bid from US giant Kraft.
Hershey, the American chocolate firm, and Italy's Ferrero have already confirmed they are looking at their options amid mounting excitement over a bid contest for the Dairy Milk maker.
Shares in the British blue chip company increased more than 2 per cent to their highest level since the Kraft takeover saga began, taking the stock to levels not seen since June 2007.
"We think the probability of a competitive auction for Cadbury has increased," said analyst Martin Deboo at brokers Investec Securities.
Kraft is also thought to be prepared to raise its offer or increase the cash element if rival bids emerge.
Analyst Jon Cox at Kepler Securities said he still believed Kraft was in the driving seat.
Kraft's current bid is made up to 300 pence of cash and the rest in new Kraft shares for each Cadbury share.
Mr Cox said he was unconvinced about Hershey's funding ability to launch a bid and even a combined deal with Ferrero would be hard pressed to get the finance.
Although Nestle can easily raise the cash, it would face big anti-trust obstacles especially in the UK, he added.
"Acquiring Cadbury would be an impossible task for Hershey alone but might be more manageable in the context of other interested parties," said analyst Jeremy Batstone-Carr at brokers Charles Stanley.
He points out that Nestle might be encouraged to make a joint offer for Cadbury, which would in part be based on the fact that Hershey already holds the lucrative licence to distribute its own Kitkat product in the US. A deal with Hershey could see that return.
Investec's Mr Deboo said that, with the likelihood of a possible competitive auction for Cadbury increasing, he was raising his target price for Cabury shares to 810p from 785p.
Dairy Milk maker Cadbury was reported to be taking a tough stance on any approaches, with weekend reports suggesting it would reject a 10.3bn bid from Hershey.
Cadbury, which has already described a hostile 9.8bn offer from Oreos and Toblerone maker Kraft as "derisory", is thought to be adamant that there would be no deal unless a much higher bid is tabled.
But interest from Nestle could bolster takeover efforts and prompt counterbids.
Nestle already owns Rowntree after a takeover in 1988 and is the group behind a raft of well-known household names, including Shredded Wheat and Nescafe.
It employs almost 7,000 people across 23 sites in the UK and Ireland and claims that around 95 per cent of households in the UK consume its products.
The group declined to comment.
Hershey, which is controlled by a charitable trust in Pennsylvania, is understood to be at an advanced stage of drawing up an offer.
This is thought to comprise 10 billion US dollars (6bn) in cash, 2 billion dollars (1.2bn) in new Hershey shares and between 3 billion dollars (1.8bn) and 5 billion dollars (3bn) from investors.
It already has a business relationship with Cadbury, holding a licence to make Dairy Milk bars and Cadbury Creme Eggs in the US.
However, Cadbury has been quick to stress its aim to remain independent unless the price is right.
A spokeswoman said on Sunday the group was "focused on delivering value to shareholders as a standalone pure-play confectioner".
There has been speculation that Hershey would team up with Ferrero Rocher maker Ferrero to mount an offer, although weekend reports speculated that Hershey had decided to go it alone.
A recognised big brand
Cadbury began life as a grocer's shop in Birmingham's fashionable Bull Street in 1824.
Cadbury is now a widely recognised brand selling products in more than 60 countries.
As an institution, it is also used to surviving economic depression.
It saw demand slump in the 1920s and 1930s and had to drive costs down, to make confectionery affordable for Britain's expanding population.
Dairy Milk is the UK's top-selling chocolate bar and more than 250 million are sold every year in 33 countries.
The group employs 800 staff at its Bassett's Liquorice Allsorts plant in Sheffield.
Email to a friend
Print this page- Three-inch blanket of snow heading our way today
- Alan Shearer in list of favourites for Leeds and England jobs: Latest odds
- Barnsley’s Keith Hill invokes Fawlty Towers over link with Leeds job
- McCormack feels United search can be narrowed down
- Redfearn throws down gauntlet as queue builds at Elland Road
Looking for...
Featured advertisers
Jobs
Search for a job
Motors
Search for a car
Property
Search for a house
Weather for Yorkshire
Saturday 11 February 2012
Today
Sunny spells
Temperature: -2 C to 0 C
Wind Speed: 8 mph
Wind direction: South
Tomorrow
Cloudy
Temperature: 2 C to 5 C
Wind Speed: 8 mph
Wind direction: North west
