Nestle eyes Cadbury takeover bid

08:35, November 24, 2009      

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A "chocolate war" over Britain's Cadbury company looms as a possible move by the Swiss confectioner Nestle was reported yesterday as joining its US and Italian peers to rival the failed takeover by Kraft Foods.

Nestle is considering options including a possible bid for Cadbury, Bloomberg quoted two sources familiar with the matter as saying.

The Vevey-based maker of Nescafe coffee and Kitkat chocolate bars matched forecasts for its nine-month sales growth and maintained its 2009 outlook, and the cash-rich Swiss firm had stated in October that it would likely raise fresh funds from a sale of its stake in eye-care firm Alcon.

Nestle last year sold 25 percent of its shares in Alcon to Swiss drug maker Novartis and now has an option to sell the remaining 52 percent stake in January 2010, giving it more than enough to swallow Cadbury.

"We're not surprised there are rival bidders considering an offer given the attractiveness of Cadbury's portfolio," Erin Swanson, an analyst at Morningstar in Chicago, said in a telephone interview with Bloomberg yesterday. "Nestle hasn't seemed interested in Cadbury, but from a defensive perspective, they could consider it and anything could happen."

Earlier this month, the US-based food producer Kraft repeated its Cadbury bid by offering shareholders 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share, unchanged from the September offer, but the $16.4 billion hostile takeover was immediately snubbed by Cadbury as being "derisory."

Last week, US chocolate maker Hershey and its Italian peer Ferrero said they were considering a bid for Cadbury, in a move that would whip up a takeover war with Kraft Foods.

On the same day, a Cadbury spokesman said that it would only consider a takeover offer that delivered "full value" for Cadbury.

Before the disclosure of Nestle's interest, the war over Cadbury had already intensified as progress took place in both bids.

Kraft has applied "to be awarded rights to determine Dirol Cadbury's business policies," seeking Russia's permission to acquire Cadbury's Russian division, the RIA Novosti news agency said Thursday.

Meanwhile, a charitable trust controlling Hershey is backing a solo bid of $17 billion for Cadbury, the Wall Street Journal reported Friday.

The bid, if it emerges, could include $10 billion in cash from Hershey and $2 billion worth of Hershey shares, with the remaining $3-5 billion in cash possibly facilitated by banker Byron Trott.

Kraft's bid would create the world's largest confectioner, threatening Nestle's and Hershey's market positions. Any bid by Nestle or Hershey may be countered with a higher offer from Kraft, which has never said its current proposal is final, Bloomberg reported.

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