The latest speculation suggests American confectionery company Hershey will be a late entry into the race for Cadbury, presenting competition to Kraft’s hostile proposal.

According to the Financial Times, the Hershey Trust has given the go-ahead for a formal offer to be presented to Cadbury prior to the January 23 deadline.

The long running ‘will they or won’t they’ questioning will soon be over as the two possible counterbidders – Ferrero and Hershey – near the deadline for a formal offer to be made. And it appears that Hershey will go it alone with Ferrero rumoured to have decided that a deal would require them to assume too heavy a debt burden.

Cadbury has previously made it clear that Hershey would be a ‘better fit’ than Kraft and appear more amenable to such a combination, although they insist that they will assess each offer on the degree of value it offers to shareholders and not the identity of the bidder. The UK confectioner still also contends that operating as a standalone business is currently the best option for the future wealth of shareholders.

Hershey, a company smaller than Cadbury, would have to take on considerable debt to complete a deal at a price Cadbury would accept, although a source told FT that they believe private equity investment would ensure the debt would be kept to a manageable level.

Kraft, meanwhile, has raised their profit guidance and engaged Cadbury’s top UK instituitonal investors in a meeting with their CEO as they step up their push for the confectioner. They are expected, however, to make adjustments to their proposal before a January 19 deadline lapses.

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