Bidding war for Cadbury looms

A bidding war for Dairy Milk maker Cadbury was in prospect today after confectioners Hershey and Ferrero said they were considering their options over the firm.

Hershey said there was "no assurance" over a definite offer, but has been linked with a joint bid in tandem with Italian confectioner Ferrero.

Ferrero also confirmed it was "in the preliminary stages of evaluating its options in respect of Cadbury".

A possible counter bid would be a blow to Oreos and Toblerone maker Kraft, which went hostile with a £9.8bn offer for Cadbury last week.

Hershey already has a business relationship with Cadbury, holding a licence to make Dairy Milk bars and Cadbury Creme Eggs in the US.

Cadbury shares rose more than 1 per cent today after the two firms confirmed their potential interest.

The intervention will put pressure on Kraft - also behind Kenco coffee and Dairylea cheese - to improve its offer for the business.

Kraft appealed directly to Cadbury's investors after its initial approach was rejected by the board in September.

But it refused to improve the terms of its cash-and-shares proposal, which is lower than two months ago due to falls in the Kraft share price.

Cadbury has labelled the Kraft bid "derisory" and said it did not come "remotely close" to reflecting the value of the company.

Kraft said last week that its merger plans offered "the best immediate and long-term value" for Cadbury - and played up the fact that no other business had publicly signalled an interest in the firm.

It wants a tie-up with Cadbury to form a "global powerhouse" which would become the number one chocolate and sweets player and a "strong number two" in chewing gum with the addition of Cadbury's Trident brand.

But Kraft also warned it would remain "financially disciplined" over its approach after its largest shareholder - billionaire investor Warren Buffett - warned the company against overpaying for Cadbury.

Cadbury began life as a grocer's shop in Birmingham's fashionable Bull Street in 1824. Dairy Milk is the UK's top-selling chocolate bar and more than 250 million are sold every year in 33 countries.