Monday, November 23, 2009

Everybody wants Cadbury

Cadbury has become very attractive, not only for it chocolate but for all it's business. After the hostile takeover attempts by Kraft Foods' all other major confectionery brands are starting to see whether they can produce a counter offer to takeover the British Brand.

One of these companies is Hershey which is controlled by a charitable trust. The Trust has encouraged the management to consider making a counter offer for Cadbury of around $17bn in such a way to topple the $16.2bn offer made by Kraft Foods.

However the bid is not imminent as there are a lot of things that Hershey has to of these is to weigh the effect that such a huge transaction (that would include a combination of stock, debt and a multi billion-dollar contribution from deep-pocketed investors such as pension funds) would effect the overall viability of the company. Cadbury is larger than Hershey so the latter must be very careful not to end up like Porsche, who tried to take over Volkswagen but ended up being takeover by the same brand.

It is also thought that Hershey is seeking the cooperation of the Italy brand Ferrero so as to form a consortium that would bid for the British Brand. However, although Ferrero has expressed it's interest for Cadbury to the UK authorities, it is sill unclear whether Ferrero is ready to take this large step.

Hershey has an advantage over Kraft Foods as it has been working closely with Cadbury for a number of years by distributing the British Brand in the US. Hershey may be a welcome alternative in what has become an increasingly contentious standoff between Cadbury’s top executives and Kraft.

How would this end up? Will Kraft manage to takeover the British Brand or will Cadbury manage to hold back and defend itself from any takeover bid?

No comments:

Post a Comment