Hershey to bid at least 17.9 bln dlrs for Cadbury
US chocolate maker Hershey plans to bid at least 17.9 billion dollars next week for British confectioner Cadbury after concluding it can top US food giant Kraft's offer, The Wall Street Journal reported Friday.WASHINGTON (AFP) - – US chocolate maker Hershey plans to bid at least 17.9 billion dollars next week for British confectioner Cadbury after concluding it can top US food giant Kraft's offer, The Wall Street Journal reported.
Hershey was finalizing a financing package that now includes a loan of at least 10 billion dollars from banks, five billion in new Hershey shares and at least three billion from private investors and the Hershey trust, the Journal said, citing people familiar with the matter.
The move would be the latest twist in an international chocolate bidding war that has seen the Cadbury board repeatedly reject Kraft's cash and shares hostile offer. The Hershey bid is seen as likely to garner more favor with the British company's chiefs.
In its current form, Hershey's bid would be equivalent to at least 800 pence (13 dollars) to 820 pence (13.33 dollars) per Cadbury share, while Kraft is offering 770 pence (12.52 dollars) a share.
That bid was approved by a special three-way transaction committee of Hershey board members that includes former Pennsylvania governor Tom Ridge, the Journal said.
Hershey chief executive David West, who has fought against the plan for months, has now "accepted such a bid will happen," the newspaper cited one of its sources as saying.
Hershey board members have also promised him the plum post of chief executive of a combined company of the chocolate giants, a person familiar with the deliberations told the Journal, which quoted another source as saying the offer was now "75 percent to 80 percent likely."
Cadbury board members have indicated they would not recommend a price below 850 pence (13.82 dollars) a share to their shareholders, according to the newspaper, which noted that the British company would likely not accept a bid from Kraft even if it upped its offer to 800 pence or more.
It also reported that concerns over keeping an investment-grade credit rating would likely prevent Hershey from going as high as 850 pence.
The Pennsylvania-based company already has a relationship with Cadbury that includes the rights to make and distribute some of the British company's products in the United States and other countries, according to Hershey's website.
"We continue to believe that our offer presents the best immediate value and attractive upside potential for Cadbury shareholders," a Kraft spokesman told the Journal.
But Peter Langerman, chief executive of Mutual Series, a subsidiary of Franklin Resources that owns more than 100 million Cadbury shares, said Kraft's offer "materially undervalues Cadbury in our view and I think just about everyone's... If there's no deal, there's no deal."
Kraft, the world's second-biggest snacks group after Nestle, has until Tuesday to make its final offer. A British takeover panel would then set a deadline for Hershey to make its bid to take over Cadbury, the second-largest confectionery company behind Mars.
A leading chocolate manufacturer in the United States, Hershey was founded over a century ago by Milton Hershey.
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