Hershey set to challenge Kraft in bidding war for Cadbury

The maker of the iconic Hershey bar could launch a formal offer for Cadbury by January 23, it was reported.

The chief executive of Oreos-to-Dairylea food giant Kraft is currently in London attempting to win support for its own bid, which currently values Cadbury at 10.5bn.

Hershey, which already has a relationship with Cadbury making Dairy Milk bars and Creme Eggs under licence in the US, was unavailable for comment.

A Cadbury spokesperson said: "As we have consistently said, we are focused on delivering value to our shareholders and unless and until we have a credible offer that adequately reflects the strength of this business, there is nothing to comment upon."

Kraft chief executive Irene Rosenfeld – under pressure not to over-pay for Cadbury from the company's biggest investor, billionaire Warren Buffett – has so far played on the fact that no other buyers are in the race.

But Cadbury has called Kraft's hostile bid as "derisory", and predicted sales growth of up to 7 per cent this year.

Hershey is said to have decided it can mount a bid without losing its investment-grade credit rating.

The firm is smaller than Cadbury and will need to raise debt to meet the UK company's likely asking price, but it is looking to raise additional equity for the move through private equity investors, the report said. Kraft increased the cash portion of its offer last week but has yet to raise the overall price and has until January 19 to do so.

Hershey traces its roots back to 1894 when Milton S. Hershey first set up business in Pennsylvania.

The name is a firm US institution and is behind other famous brands such as Hershey's Kisses.