Hershey has confirmed that it is “reviewing its options” regarding a possible joint bid with Ferrero for British confectioner Cadbury, following media speculation about talks yesterday.
Following Kraft’s initial bid in September, there had been rumors that potential rival bidders could come forward, but the Hershey/Ferrero interest is the first alternative to have emerged, and consumer goods giant Unilever ruled itself out as a possible bidder earlier this month.
In a brief statement, Hershey said that it had noted “the recent press speculation regarding a potential offer for Cadbury.”
It said: “Hershey confirms that it is reviewing its options and at this stage there can be no assurance that any proposal or offer from Hershey will be forthcoming. A further announcement will be made in due course if appropriate.”
Ferrero, the Italian-based maker of TicTac mints, Nutella and Kinder Surprise, has also said that it is in the early stages of evaluating its options regarding Cadbury.
Cadbury share prices surged on the news, to 797.5 pence ($13.25) – or about 10 percent up on Kraft’s offer to shareholders of 300 pence and 0.2589 new Kraft shares for each Cadbury share, as the Hershey/Ferrero talks stripped away any doubt about the attractiveness of Cadbury as an acquisition.
Following the Mars/Wrigley merger last year, which created the world’s largest confectioner, Cadbury’s gum business has looked particularly desirable, alongside its growth prospects in emerging markets such as India and Mexico.
Kraft launched a hostile takeover bid for Cadbury last week, which was swiftly rejected by the board. But by launching a bid that is worth less than its initial offer, Kraft has effectively sidestepped Cadbury’s board and appealed directly to shareholders.
Meanwhile, Unite, the union representing Cadbury workers, has written to Kraft CEO Irene Rosenfeld urging the company “to come clean on its plans for Cadbury and its UK workforce” should its bid be successful.