Wednesday November 18, 01:57 PM
Chocolate groups Hershey, Ferrero eye Cadbury
LONDON (AFP) - US chocolate maker Hershey (NYSE: HSY - news) and Ferrero of Italy said on Wednesday they were mulling a potential counter-bid for confectioner Cadbury (LSE: CBRY.L - news) , the object of a hostile offer from Kraft Foods (NYSE: KFT - news) .
The news could remould the chocolate-making sector with a takeover costing more than 10.0 billion pounds.
The Wall Street Journal, citing unnamed sources familiar with the matter, had reported on Tuesday that Ferrero was in talks with Hershey over a potential joint bid.
The pair said in separate statements to the London Stock Exchange (LSE: LSE.L - news) on Wednesday that they were considering options regarding Cadbury.
"The Hershey Company notes the recent press speculation regarding a potential offer for Cadbury," Hershey said in a statement.
"Hershey confirms that it is reviewing its options and at this stage there can be no assurance that any proposal or offer from Hershey will be forthcoming. A further announcement will be made in due course if appropriate."
Cadbury's share price rose on Wednesday in reaction to the prospect of a takeover battle.
Ferrero also said it was looking over Cadbury.
"Ferrero notes the recent press speculation regarding a potential offer for Cadbury. Ferrero confirms it is in the preliminary stages of evaluating its options in respect of Cadbury," Ferrero said in its statement.
"There can be no certainty that any proposal relating to Cadbury will ultimately be forthcoming," it added.
Ferrero is a privately-held company that makes Ferrero Rocher chocolates, Kinder Surprise eggs, Nutella spread and Tic Tacs.
Pennsylvania-based Hershey already has a relationship with Cadbury and holds a licence to produce its Dairy Milk chocolate bars and Cadbury Creme Eggs in the United States.
The Wall Street Journal had also reported on Tuesday that talks between executives at Hershey and Ferrero had not yet produced an offer.
The discussions, in preliminary stages, were being held up by a dispute on Cadbury's higher-margin gum and candy businesses, according to the daily US newspaper.
The report said Hershey had been eyeing Cadbury but lacks the financial resources on its own to top Kraft's offer.
Last week, Kraft launched a formal hostile 9.8-billion-pound bid for Cadbury, which the British company rejected as "derisory."
A combination of Kraft and Cadbury would bring together leading Kraft brands Oreo biscuits and Maxwell House coffee with Cadbury's big sellers such as Dairy Milk and Trident chewing gum.
Cadbury's share price jumped 1.40 percent to 799 pence in early afternoon trade on London's FTSE 100 index of leading companies, which was 0.49 percent higher at 5,371.76 points.
"Chocolate maker Cadbury was up ... as the prospect of a bidding-war loomed, with Hershey and Ferrero emerging as potential partners to see off Kraft Foods," said IG Index analyst Anthony Grech.
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