Hershey, Ferrero mull Cadbury Bid
A chocolate war looks set to emerge between for British confectionary maker Cadbury. Both Hershey and Ferrero are considering a joint bid that would ward off a potentially hostile takeover by Kraft Foods Inc. On Nov. 9th, Cadbury rejected a $16 billion offer by Kraft, calling it “derisory”.
“Cadbury has heard nothing from Ferrero or people acting for it. Cadbury is not up for sale, but the company would give proper consideration to any offer that valued it properly and would be of interest to shareholders,” said a source.
Being that Cadbury’s assets are extremely appealing, “it doesn’t appear that either Ferrero or Hershey is in the financial position of taking on Cadbury all by themselves,” said Erin Swanson, an equity analyst with Morningstar.
However, It’s unclear whether they can come up with the financing or not. Hershey and Ferrero, with annual sales of $5 billion and $9.3 billion respectively, are much smaller than $42 billion Kraft.
EU Competition authorities will rule on Kraft’s bid in December. Whether or not Hershey and/or Ferrero will make a formal offer depends on that access to financing, considering that British takeover rules require that any rival bidders assure financing ahead of bidding.