Cadbury may have a taste for Terry's

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The Independent Online
THE food and drinks maker Cadbury-Schweppes emerged as a prospective buyer of Terry's Group yesterday, threatening the biggest shake-up in the UK chocolate industry since Nestle gobbled up Rowntree five years ago.

Cadbury would probably have to launch a private placing of shares or a rights issue if it went ahead with the pounds 200m purchase, analysts said.

It might also face a monopolies inquiry, since it already has about 33 per cent of the UK chocolate market and Terry's would give it another 3 per cent.

United Biscuits, the owner of Terry's, confirmed it had received 'approaches by third parties' and was considering its position. Other interested groups are thought to include Philip Morris of the US and Nestle of Switzerland.

Hershey of the US might also be interested in Terry's brands, which include All Gold, Moonlight, Chocolate Orange, Callard & Bowser toffees, Nuttall's mints and in France Chocometz. It made trading profits of pounds 14.3m on sales of pounds 153m in its last full year.

It would make an attractive fit for Cadbury, which has many leading brands including Milk Tray, Roses, Dairy Milk and Creme Eggs, and dominates the assorted chocolates sector.

However, a merger might threaten some of the 2,270 jobs at Terry's, whose UK factories are at York and Bridgend. It also has operations in France, Italy and the US.

Philip Morris, the tobacco giant that makes Marlboro cigarettes, has a healthy appetite for European confectionery. It paid dollars 3.8bn for Jacobs Suchard of Switzerland in 1990 and dollars 1.5bn for Freia Marabou, the Norwegian confectionery firm, last year.

It would not be the first time Terry's had a foreign parent. The US group Colgate-Palmolive bought it from Trusthouse Forte in 1977, selling it to UB in 1982. Terry's was privately owned until 1963 and traces its history as far back as 1767 and the Blaydon & Berry shop in Bootham, York.

Cadbury, which reports its full- year results next month, has gearing of about 70 per cent, depending on how it is calculated. A spokeswoman declined to comment on a possible purchase of Terry's.

The sale would cut UB's growing debt. Its gearing rose to 88 per cent last month after its pounds 47m purchase of Bake-Line, the US biscuit maker.

UK sales of confectionery reached pounds 4.2bn last year: 70 per cent was chocolate and 30 per cent sugar confectionery. Cadbury, Mars and Nestle together have about 75 per cent of the market.

However, parts of the industry have been badly hit by recession. Consumers regard boxed chocolates as a dispensable luxury and retailer purchases fell 15 per cent in 1991. Terry's bucked the trend by launching new products including variants of its Moments bar and a new truffle Pyramint bar. It also lifted supermarket own-label sales by 40 per cent.

In 1988 the industry hit the headlines when Nestle launched a pounds 2.6bn takeover of Rowntree, the York-based maker of KitKat and Smarties, after a dawn raid from Suchard.

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