Cadbury, which will today formally launch its defence against Kraft Foods's £10.1bn hostile takeover bid, is reported to have held talks with Hershey about plans for the US chocolate maker to table a rival bid that the Cadbury board could recommend to shareholders. Hershey is still weighing up making a offer for the British confectioner but does not want to get involved in a bidding war with Kraft.
A potential bid by Hershey is likely to include a larger cash element than Kraft's cash-and-shares offer. Cadbury, which last month called Kraft's hostile bid "derisory" and "unattractive", will make a forceful defence alongside a pre-close trading statement.
Kraft offered 0.2589 of its own shares and 300p in cash for each Cadbury share, which valued the Cadbury shares at 718p each. Owing to share price falls and currency fluctuations, this was 4 per cent below the indicative offer price of 745p in early September.