US chocolate maker Hershey could jump into a takeover battle with a bid for Cadbury after the British confectioner rejected an offer from food giant Kraft Foods, the Wall Street Journal (WSJ) said yesterday.
The Pennsylvania-based company “is likely to make some response” to Kraft’s Monday bid, the financial daily said, citing a source close to the matter.
Hershey’s potential bid rises from awareness “that Cadbury is the last major confectionery company potentially available,” the paper quoted the person as saying.
In comparison to Kraft, Hershey’s position in the market is diminutive — its annual turnover of some US$5 billion is eight times smaller than the food giant.
However, the WSJ said, Hershey and Cadbury have a long working relationship, having talked about combinations in the past. The firm also distributes the iconic British confectioner’s products in the US.
On Monday Kraft Foods’ US$16.7 billion bid was spurned by Cadbury, though Kraft said it hoped the British group would eventually jump on board.
Cadbury’s share price, however, surged on the news and ended the day with a gain of 37.85 percent at £783 (US$12.96).
In January 2007 top Hershey and Cadbury officers sat down to consider forming a “global confectionery powerhouse,” though the financial daily said nothing came of the discussions.
Kraft Foods, the world’s second biggest food group after Nestle, said it hoped the takeover would increase annual revenues to US$50 billion a year.
A tie-up between Kraft and Cadbury would merge leading Kraft brands Oreo biscuits and Maxwell House coffee with Cadbury’s Dairy Milk chocolate and Trident chewing gum.
Cadbury’s chief executive Todd Stitzer, however, maintained that the proposal “fundamentally undervalues” the company and its prospects.
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