US confectioner Hershey Co is preparing a bid for British chocolate maker Cadbury, that will counter US-based Kraft Foods' 10.4 billion pound hostile offer, media reports says.
Quoting people familiar with the matter, the Financial Times said that "the charitable trust that controls Hershey is preparing a counter-bid to Kraft's hostile 10.4 billion pound offer for Cadbury."
A formal offer to this effect could be made within two weeks, the daily said citing sources. A Hershey bid would be welcomed by Cadbury, which is resisting Kraft's approach.
"Although Cadbury has not solicited a 'white knight' bid from Hershey publicly, the confectioner has made clear that it would prefer Hershey to Kraft," FT said.
The charitable trust owns a third of Hershey's stock but controls 80 per cent of its shareholder votes. Meanwhile, Cadbury Chairman Roger Carr has told the newspaper that "Hershey, which owns the rights to the Cadbury brand in the US, is 'more appealing' from a cultural view.
As per a plan under discussion, Hershey Foods will authorise a former Goldman Sachs investment banker Byron Trott to attract private equity investors into the deal. The use of debt, could threaten Hershey Trust's investment-grade credit status, but sources told FT that the bid being prepared "will probably be investment-grade and do'able".
