Nestlé may enter race for Cadbury
Speculation is mounting that Nestlé will enter the race for Cadbury as Hershey looks to make an initial offer and Kraft considers raising theirs – which has been lambasted by Cadbury as “derisory”.
Swiss-based Nestlé will be able to fund a bid, but whether they wish to take on a confectioner at a time when they are pushing their health and wellness credentials remains the big issue. They are also likely to come under greater scrutiny from competition authorities given their position as the world’s largest food manufacturer.
The likes of Nestlé, Hershey and Ferrero are all worried about the impact of a Kraft-Cadbury tie-up on their own businesses. A deal world create the world’s largest confectionery manufacturer, usurping Mars – who will not challenge in the bidding process as they are still busy integrating last year’s massive purchase of Wrigley.
Hershey and Ferrero both admitted they were weighing up their options last week with regard to a possible joint or separate bid, although the latest reports indicate that Hershey may go it alone as Ferrero remains lukewarm about the idea.
Sources close to the situation have informed the Wall Street Journal that a Hershey bid could be expected within the next fortnight, with an offer likely to be around half a billion dollars above that of Kraft’s. Cadbury executives have already indicated that a merger with Hershey would be more alluring than a takeover by Kraft given Hershey’s focus on confectionery. However, they continue to insist that they are confident in their prospects as a standalone company and appear unlikely to support any bid at this stage – unless it is markedly higher than the Kraft proposal.
It is possible that the likes of Hershey and Nestlé are not seriously considering getting involved in a bidding war but are simply looking to drive the price up for rival Kraft.
As it stands, the Kraft bid is the only one ‘on the table’ but is unlikely to win shareholder support and the US manufacturer is consequently mulling a higher bid price, according to reports.