Cadbury sweetened by bid battle hopes

Cadbury shares hit a fresh two-year high today on hopes of a takeover tussle as reports suggested Swiss food group Nestle is considering entering the fray.

Kit Kat and Aero maker Nestle is said to be considering its options, which could see it put forward an offer to rival the hostile €10.8bn bid from US giant Kraft.

Hershey, the American chocolate firm, and Italy’s Ferrero have already confirmed they are looking at their options amid mounting excitement over a bid contest for the Dairy Milk maker.

Shares in the British blue chip raced more than 2% to their highest level yet since the Kraft takeover saga began, taking the stock to levels not seen since June 2007.

Kraft is also thought to be prepared to up its offer or increase the cash element if rival bids emerge.

Dairy Milk maker Cadbury was yesterday reported to be taking a tough stance on any approaches, with weekend reports suggesting it would reject a €11.4bn bid from Hershey.

Cadbury, which has already described a hostile €10.8bn offer from Oreos and Toblerone maker Kraft as “derisory”, is thought to be adamant that there would be no deal unless a much higher bid is tabled.

But interest from Nestle could bolster takeover efforts and prompt counterbids.

Nestle already owns Rowntree after a takeover in 1988 and is the group behind a raft of well-known household names, including Shredded Wheat and Nescafe.

It employs almost 7,000 people across 23 sites in Ireland and the UK.

The group declined to comment.

Hershey, which is controlled by a charitable trust in Pennsylvania, is understood to be at an advanced stage of drawing up an offer.

This is thought to comprise of $10bn in cash, $2bn in new Hershey shares and between $3bn and $5bn from investors.

It already has a business relationship with Cadbury, holding a licence to make Dairy Milk bars and Cadbury Creme Eggs in the US.

However, Cadbury has been quick to stress its aim to remain independent unless the price is right.

A spokeswoman said yesterday the group was “focused on delivering value to shareholders as a standalone pure-play confectioner”.

There has been speculation that Hershey would team up with Ferrero Rocher maker Ferrero to mount an offer, although weekend reports speculated that Hershey had decided to go it alone.

Cadbury began life as a grocer’s shop in Birmingham’s fashionable Bull Street in 1824. Dairy Milk is the UK’s top-selling chocolate bar and more than 250 million are sold every year in 33 countries.