advertisement

Cadbury bidding war speculation mounts

LONDON -- Speculation of a bidding war for British candy maker Cadbury PLC mounted on Monday after Swiss food group Nestle agreed to sell off its majority stake in eyecare unit Alcon and announced a smaller-than-anticipated share buyback program.

Analysts suggested that Nestle could be clearing its decks in preparation to counter a hostile 9.8 billion pound ($16.3 billion) cash and shares offer from Northfield-based Kraft Foods Inc., which is also tipped to raise that current bid.

Locally, Nestle has operations in DeKalb, Woodridge, Buffalo Grove and Naperville.

Nestle, the maker of Nescafe coffee and KitKat chocolate bars, said Monday it is selling its 52 percent stake in Alcon for $28 billion to Swiss drug maker Novartis. It added that the deal would allow it to launch a new 10 billion Swiss franc ($9.64 billion) share buyback program for two years once its existing 25 billion program is completed this year.

"This implies that Nestle has made use of just $10 billion of the forecast $28.5 billion stake sale proceeds and adds to market speculation that Nestle might be in the process of building a 'war chest' to enter the Cadbury fray," said Charles Stanley analyst Jeremy Batstone-Carr.

However, Batstone-Carr added that Nestle's interest is likely to be limited to Cadbury's gum operations, should Kraft or another suitor emerge triumphant.

Cadbury, which is battling to remain independent, has confirmed receiving tentative approaches from The Hershey Co. and Italy's Ferrero International SA.

Batstone-Carr said that Kraft remains the most likely suitor at present and is widely expected to raise its offer before a U.K. Takeover Panel deadline of Jan. 19.

Cadbury shares were trading at 804 pence, up 0.8 percent on Monday, well above the 738 pence per share offer price from Kraft.

Cadbury, the maker of Dairy Milk chocolate and Dentyne gum, is due to release a trading update, including Christmas sales, on Jan. 15.

<div class="infoBox">

<h1>More Coverage</h1>

<div class="infoBoxContent">

<div class="infoArea">

<h2>Stories</h2>

<ul class="links">

<li><a href="/story/?id=348223">Kraft may extend Cadbury offer as shares trade above bid price <span class="date">[01/04/10]</span></a></li>

<li><a href="/story/?id=348263">Novartis looks to buy out Alcon for $38.5 bil <span class="date">[01/04/10]</span></a></li>

</ul>

</div>

</div>

</div>

Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the "flag" link in the lower-right corner of the comment box. To find our more, read our FAQ.