Cadbury at record high as bid war hopes rise
Kraft CEO Irene Rosenfeld. Photo: Bloomberg News
Tuesday November 24 2009
CADBURY rose to a record in London trading after Nestle was said to weigh a takeover.
The Wall Street Journal said Hershey's controlling trust wants the US company to make an offer, and Reuters reported that Kraft may raise its bid.
Kraft, led by CEO Irene Rosenfeld (right), made an unsolicited £10.3bn approach for Cadbury two months ago. The world's second-largest food company may increase that offer if rival bidders emerge, Reuters said late yesterday, citing a person it didn't identify.
Hershey's controlling trust wants the company to make a $17bn offer, the 'Wall Street Journal' reported at the weekend. Nestle is reviewing its options with bankers and may decide against a bid, said two people with knowledge of the matter, who asked not to be identified because the talks are private.
"Every confectionery company of any decent size is going to be looking at this because it's a one-off opportunity," said James Amoroso, a food industry consultant in Switzerland. "They'd be stupid not to examine it."
Cadbury shares rose as much as 2.4pc to 819.5p, surpassing their previous September 7 peak, the day Kraft disclosed its approach.
Potential
"Irene is going to be feeling less comfortable by the minute," said William Hobbs, who helps manage £134bn in assets, including Cadbury shares, at Barclays Wealth in London. "Nestle could do it, no problems. More interest can only be good news for Cadbury holders."
Press officers for Nestle, Cadbury and Hershey declined to comment.
"Whilst some potential offerors are more aligned with our business model than others, it is the value of the offer rather than the source of the offer that is our priority," Cadbury chairman Roger Carr said. Hershey and Ferrero SpA said in statements last week that they were also evaluating options.
Ferrero, the maker of Nutella, is unlikely to proceed with an offer, said three people briefed on the situation.
"We're the only offer on the table, and we're confident we're the best, most logical partner for Cadbury," Mike Mitchell, a Kraft spokesman, said last week.
Scenarios
Spokesmen for Hershey and Vevey, Switzerland-based Nestle, declined to comment, as did a representative from Cadbury.
In one possible scenario, Hershey would contribute at least $10bn in cash and $2bn in new shares, the 'Wall Street Journal' reported.
Former Goldman Sachs banker Byron Trott is talking to investors about supplying an additional $3bn to $5bn in cash to help with the purchase.
The trust would sell assets, though it would try to maintain control of Hershey.
Nestle has an option to sell its majority stake in eyecare company Alcon to Novartis as early as January, and could use the proceeds, which may total more than $20bn, to make acquisitions.
"How much do they want it?" Jon Cox, an analyst at Kepler Capital Markets in Zurich, said of Nestle, a stock he recommends buying.
"If they wanted it, they'd have it, it's a bit of a slam dunk.
"Nestle has the financial resources," he added. (© Bloomberg)
Irish Independent
