Lindt & Sprungli, the upmarket Swiss chocolate maker, is the sector’s “obvious” takeover target and could be snapped up next year, one analyst has claimed – with Nestle seen as the favourite to buy the business.

Jon Cox, an analyst at Kepler Capital Markets in Zurich, today (13 November) cut his estimate for Lindt’s share price in 2010, citing the pressure rising cocoa costs will put on margins.

In August, Lindt reported a slump in half-year profits and Cox argued that the company could issue a profit warning when it reports its annual results next March.

“We believe high cocoa prices will trigger another profit warning from Lindt, the second in as many years for the former food sector darling,” Cox said.

Lindt said in March that its profits would fall this year but claimed earnings would return to 2008 levels by 2010. Cox, however, warned that target is “increasingly unlikely” to be met.

How well do you really know your competitors?

Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.

Company Profile – free sample

Thank you!

Your download email will arrive shortly

Not ready to buy yet? Download a free sample

We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form

By GlobalData
Visit our Privacy Policy for more information about our services, how we may use, process and share your personal data, including information of your rights in respect of your personal data and how you can unsubscribe from future marketing communications. Our services are intended for corporate subscribers and you warrant that the email address submitted is your corporate email address.

He added: “We believe Lindt spends 12% of revenue – CHF300m – on cocoa and cocoa products. With cocoa rising by a third – albeit in pounds – it is not hard to envisage the company having to spend CHF400m on cocoa in 2010.”

Moreover, next year, Cox argued, could be a year in which Lindt finds itself the subject of a takeover bid. The Kepler analyst said the premium chocolate category remains an attractive business for the major global chocolate makers, which lack a truly international upmarket brand and business.

Cox told just-food that Nestle is the most likely candidate to buy Lindt and would prevail in the event of a takeover battle involving the likes of Mars Inc.

“I think Nestlé would win and it is obviously a Swiss-Swiss tie up. Nestlé is starting to invest again in chocolate again and can see its business is profitable after turning it around so I think in terms of strategic priority it is moving up the ranks for attention.”