Hershey's, Nestle may counterbid for Cadbury

As the UK woke up to the news at 7 am on Monday, 7 September that Cadbury had rejected a $16.7-billion takeover offer from US food and beverage giant Kraft (See: Cadbury rejects Kraft Foods' $16.7 billion merger offer), the acquisition offer has set other global confectionery makers, especially Hershey's and Nestle mulling a counterbid.

Although Kraft's chief executive Irene Rosenfeld, who ranks number six in the Forbes list of the World's 100 Most Powerful Women, had met Todd Stitzer, chief executive of Cadbury on 28 August and outlined the deal to him, which the Cadbury board rejected immediately, Kraft chose to go public only on 7 September to ramp up pressure on the UK confectioner and get the support of its shareholders.

But little did Kraft realise that by going public with the rejected offer, it would prompt other rivals to wake up to the competition in their backyards and consider a counterbid as Kraft put Cadbury into play in the market.

If Kraft succeeds in acquiring Cadbury, it will not only put US giant The Hershey Food Co in the fourth place in global candy business, but also open it to immense competition in the US, which accounts for 86 per cent of its revenue.

Hershey, the Pennsylvania, US-based confectioner, run by the tight knit Hershey Charitable Trust that controls 77 per cent of the company's voting stock and 31 per cent of common stock, is reported to have appointed JPMorgan Chase to advise it on its options as it considers a counterbid for Cadbury.

Hershey Foods, founded in 1894 by Milton Hershey is North America's leading manufacturer of chocolate and non-chocolate confectionary and chocolate-related grocery products. Some of its most well known chocolate brands include Hershey's Kiss, Kit Kat, and Reese's Peanut Butter Cups.