Swiss food giant Nestlé and UK confectioner Cadbury Schweppes are reported to be in talks that could lead to a joint bid for US chocolate and candy company Hershey Foods.
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The two groups are rumoured by media reports including The Business and the Mail on Sunday to be discussing plans to make a joint approach and then carve up Hershey’s assets between them. Rumours suggest that Nestlé would acquire the lion’s share of Hershey, while Cadbury would pick up its own brands, which are currently licenced to Hershey in North America.
However, it has been suggested by sources close to Cadbury that the UK group believes distribution rights to its brands revert to it if Hershey is sold, so there is no need for it to get involved in the bidding. The same would apply to Nestlé, which is keen to get back US distribution rights to its KitKat countline brand.
It is likely that Cadbury is not seriously interested in buying Hershey, even in a joint bid with Nestlé, but is simply eying the possibility of picking up any brands Nestlé or any other eventual buyer may be forced to offload in order to satisfy competition concerns.
So, it could all become academic…
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By GlobalDataThe Reuters news agency reported that Cadbury had hired investment bank Goldman Sachs to advise it concerning the Hershey sale.
Meanwhile Nestlé spent much of last week playing down mounting speculation that it would buy Hershey for a rumoured US$12bn. First CEO Peter Brabeck denied reports he was ready to pay that amount of money for Hershey, and then went on to express the opinion that the Federal Trade Commission would block an outright purchase by Nestlé as anti-competitive.
Meanwhile, the trust behind Hershey Foods is facing strong opposition to its plan to sell the company, with a US court shortly to consider an injunction against the sale. The motion will be heard by a court tomorrow [Tuesday].
