US chocolate giant Hershey has been in contact with Nestle over a possible joint bid for Cadbury, according to reports.
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An offer between the two could challenge the hostile GBP10.2bn (US$17bn) bid currently on the table from Kraft Foods, Bloomberg reported.
However, it is not certain that an agreement will be reached, with Hershey preferring to bid alone, a source told the publication.
Industry analyst Nomura last week suggested that Nestle could buy back the Kit-Kat and Rolo brands in the US from Hershey, giving the US chocolate giant the power to fund a combination with Cadbury.
“We believe that there is compelling logic for both Nestle and Hershey to seek to structure an alternative to the current offer for Cadbury from Kraft,” analysts David Hayes, Alex Smith and Guillaume Delmas at Nomura said.
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By GlobalData“We estimate that Nestle has an opportunity to acquire the Kit-Kat brands in the US, add gum and medicated products to its confectionery portfolio, and create real value by using its balance sheet capacity.”
This, Nomura said, could see Cadbury ultimately being sold for up to 900p per share.
Stifel Nicolaus analyst Christopher Growe told Bloomberg that teaming up with Nestle would provide Hershey with more cash for an offer.
A Kraft takeover of Cadbury, the owner of Dairy Milk chocolate and Trident gum, would create the world’s largest maker of candy.
“Hershey is an uncompetitive bidder without a partner,” Growe said.
Nestle today (8 December) declined to comment on “market rumour or speculation” when contacted by just-food.
