Chocolate makers Hershey Co and Ferrero SpA are considering a joint bid for Cadbury Plc that could help the British confectioner fend off a hostile takeover by Kraft Foods Inc.
A source familiar with the talks between US-based Hershey and Italy's Ferrero said on Tuesday that the discussions between the two sides were “very preliminary; very early in the process.”
Hershey executives have been more aggressive about pursuing a deal, but financial details have not been discussed and no offer has been made, the Wall Street Journal reported on Tuesday.
The talks are the strongest sign yet of a possible rival bid to Kraft's $16.7 billion offer, which Cadbury rejected and said was “derisory”.
Another person familiar with the situation said that Cadbury had not been contacted by Ferrero but would consider any attractive offer. Analysts and traders said there was a possibility that such an alliance might emerge and pose a viable defense against Kraft.
“Cadbury has heard nothing from Ferrero or people acting for it. Cadbury is not up for sale, but the company would give proper consideration to any offer that valued it properly and would be of interest to shareholders,” the person said.
Ferrero and Cadbury both declined comment. Hershey and Hershey Trust officials could not immediately be reached.
Although Cadbury's assets are very attractive, “it doesn't appear that either Ferrero or Hershey is in the financial position of taking on Cadbury all by themselves,” said Erin Swanson, an equity analyst with Morningstar. (Reuters)