Hershey prepares to bid for Cadbury: report

US-based confectioner Hershey is planning to make a counter-bid to its larger rival Kraft's $16.7-billion unsolicited takeover offer for Cadbury after receiving the nod from the tight knit Hershey family's Hershey Charitable Trust.

The Hershey Charitable Trust, which controls 77 per cent of Hershey's voting stock and 31 per cent of common stock has given its consent after holding internal debates with the top executives of Hershey led by chief executive, David West, who was initially reluctant to bid for the British confectioner.

Since November, Hershey is reported to have been mulling a solo bid of $17 billion for Cadbury, (See: Hershey reportedly mulling $17 billion solo bid for Cadbury) but West was not willing to take on high debts, which would automatically lower the company's investment-grade credit rating.

The UK's Financial Times reported today that after having resolved the issue over whether the Cadbury deal would hurt its financial flexibility; the Pennsylvania-based Hershey will make a counter-bid before the 23 January deadline set by the UK Takeover Panel, without hurting its investment-grade credit rating.

Citing people familiar with the matter, FT reported that Hershey would make cash and stock offer, with its lenders, JPMorgan Chase and Bank of America, having agreed to finance the cash part of the transaction.

Hershey has appointed Byron Trott, the ex-Goldman banker with close ties to Warren Buffett, Kraft's single largest shareholder, to rope in rich investors in private equity, for additional funding.