Kraft weighs higher Cadbury bid as rivals circle: Source

RELATED NEWS Nestle may consider a bid for Cadbury Hershey weighs USD 17 billion Cadbury bid

Hershey preference?

Cadbury maintains it is worth more than the Kraft cash and stock offer that valued the company just shy of 718 pence based on Friday's price. Cadbury investors have said they would not contemplate an offer below 800p, with 820p considered a potential deal-closer.

"We're focused on delivering value to shareholders as a stand-alone, pure-play confectioner," Cadbury said in a statement. "However, we've always said we'd give proper consideration to any serious offer that delivers full value for the company. Unless and until we find ourselves in that situation, we have nothing to comment on."

Faced with a choice between the two US companies, Cadbury's Chairman Roger Carr said he would prefer a merger with Hershey rather than Kraft. But he added both bids could fail should they not be generous enough.

"Clearly, whilst some potential offerors are more aligned with our business model than others, it is the value of the offer rather than the source of the offer that is our priority," Carr told the Sunday Telegraph.

Analysts had viewed Nestle as a potential suitor for Cadbury since Kraft made its offer public on September 7, but such a deal may face antitrust hurdles. The company has also said it does not plan any big acquisitions this year or next, but will focus on a strategy of "bolt-on" buys.

At the same time, the world's largest food maker could easily swallow a large purchase. Nestle said in October it was likely to exercise its option beginning in January 2010 to sell its remaining 52% stake in Alcon, potentially raising up to USD 28 billion.

Due to competition issues, analysts had speculated that Nestle might consider a joint offer with Hershey, with the US group taking on Cadbury's chocolate operations and leaving Nestle with the Trident chewing gum business.

Some market players have suggested Nestle could still help Hershey fund a bid by buying its US license for the KitKat brand, potentially worth around USD 3 billion to USD 3.5 billion.