Nestle also interested in Cadbury
23 November 2009
The chocolate war for acquiring Cadbury is taking a new dimension with Swiss food group Nestle also reported to be mulling a bid for London-based confectioner after Hershey and Ferrero last week saying they could be open to making a counter bid to Kraft's September $16.7-billion bid for Cadbury.
Bloomberg said late last night that the Switzerland-based Nestle, which had sales of £65 billion last year, is considering making a bid for Cadbury to thwart Kraft's hostile bid and block a potential counter offer from Hershey, the Pennsylvania-based confectioner and Italian chocolatier Ferrero. (See: Hershey, Ferrero to rival Kraft's bid for Cadbury)
Bloomberg, citing two people, who asked not to be identified because the talks are private, said that Nestle is reviewing its options with bankers and may decide against a bid.
The maker of Nescafe coffee and Kitkat chocolate bars has more than enough cash reserves and is sitting on $10.4 billion in cash after having sold a 25-per cent stake in the world's largest and most profitable eye care company, Alcon to Novartis in July 2008. (See: Novartis completes first step acquisition of 25-per cent stake in Alcon from Nestlé)
If need be, Nestle could raise more funds by selling the remaining 52-per cent stake held in Alcon for approximately $28 billion, whichit said in October would be disinvested by 2011.
Although it has the financial muscle power to outbid Kraft, Hershey and Fererro, Nestle would be constrained by antitrust concerns, as a merger with Cadbury would dominate the chocolate markets in some countries.