Hershey mulls US$17 bil. solo bid for Cadbury: source

The interest from Hershey could add new pressure on Kraft to sweeten its US$16.5 billion offer, which Cadbury rejected last week as derisory.

“It's still very fluid and there are multiple prongs to this,” the source told Reuters on condition of anonymity. “It's still very early. But they need at least US$17 billion to top Kraft.”

Citing people familiar with the matter, the Wall Street Journal reported on Friday afternoon that the impetus for the Hershey bid comes from the charitable trust controlling the company. The trust is pushing Hershey Chief Executive David West to compete with Kraft's offer, but wants to structure a deal so that it remains in charge of Hershey, the report said.

Officials for the Hershey Trust were not immediately available for comment. Hershey, Kraft and Cadbury declined to comment.

A solo Hershey bid would be the most transformative move the company has made in its 100-year history. The company's market capitalization stands at US$8.3 billion, while Cadbury is valued at US$18.1 billion.

“Given that they generate 85 percent of their sales form the domestic market, gaining access to Cadbury's platform would be highly advantageous,” said Erin Swanson, analyst at Morningstar, noting Cadbury's presence in emerging markets.

She added that Hershey would be able to expand its candy and gum business. But a deal would mainly aim to capture new growth as there is little overlap between the companies' businesses and therefore slim opportunity for cost savings.

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