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SharePhiladephia: US chocolate maker Hershey Co is considering launching a bid of at least $17 billion for British chocolatier Cadbury Plc as it seeks to trump a hostile offer by Kraft Foods Inc, a source familiar with the matter said on Friday.
Hershey has lined up deal funding from Bank of America and JP Morgan Chase & Co to make a solo offer for Cadbury, but is also still weighing a joint bid with Italy's Ferrero Spa, the source said.
The interest from Hershey could add new pressure on Kraft to sweeten its $16.5 billion offer, which Cadbury rejected 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 $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 Hershey and the Hershey Trust were not immediately available for comment.
Earlier this week, Hershey disclosed it was considering a bid for Cadbury and sources familiar with the matter said it was also discussing a potential joint offer with Ferrero.
A source familiar with the situation told Reuters that the two companies have weighed breaking the UK confectioner up into separate businesses as part of a friendly, all-cash bid. But both Ferrero and Hershey have interest in Cadbury's chocolate business, while Cadbury may not be keen on a friendly bid if it calls for a break-up of the company.
Ferrero and Hershey have ample time to decide how and whether to proceed with a Cadbury offer since the final decision on Kraft is not slated to come until early February.
