David Prosser: Nestlé mulls Cadbury bid

Outlook: The dream ticket might be a tie-up with America's Hershey

Is Nestlé back in the frame for Cadbury? The £17bn it has raised from the sale of eyecare specialist Alcon gives it the firepower to compete with Kraft for the UK's favourite chocolate company, or with rival bidders still to emerge.

Given the competition issues that would make a full takeover of Cadbury almost impossible for the Swiss confectioner, a more likely scenario is a joint bid with one of these rivals. We know Nestlé is interested in the chewing gum market because it lost out to Cadbury a few years ago in a bid for Trident, The dream ticket, therefore, might be a tie-up with America's Hershey. Nestlé would take Cadbury's gum business with Hershey getting the chocolate operations. For its part, Cadbury has let it be known that it feels more comfortable with the idea of a deal with Hershey than with Kraft, so Nestlé's involvement in this affair might be welcomed by the British company.

On the other hand, Nestlé might not fancy getting caught up in a bidding war. Another option for Nestlé is to hope that Kraft wins the day, then try to buy certain units from the US company, which would be under pressure to rebuild its finances. Either way, the battle for Cadbury gets harder to call by the day.