HERSHEY is preparing to launch a solo takeover bid for Cadbury to rival the $17bn (£10.4bn) bid from Kraft.
The American firm initially showed interest in a joint bid with Italy’s Ferrero, but now the chocolatier has dropped out of the running Hershey has authorised a bid.
It is expected to make a formal offer before the 23 January deadline. Cadbury is known to favour a bid from Hershey.
Hershey Trust, which owns a third of Hershey’s stock but controls 80 per cent of its shareholder votes, is preparing to make an equity investment of $1.25bn.
The equity investments would reduce the amount of debt to be raised to below levels that would threaten Hershey’s investment grade credit rating.
However, executives and directors at the company are believed to be divided on whether to bid for Cadbury.
One person close to the situation told City A.M.: “I’m sure they’d love to make a bid but they may wait until Kraft has made its final move.”
Meanwhile, in an unlikely twist, the investment banker charged by Hershey to attract private equity investors to the deal is an old friend of Kraft’s major shareholder Warren Buffett. Byron Trott, former vice-chairman of investment banking at Goldman Sachs, helped to persuade the Sage of Omaha to take a $5bn stake in the bank in 2008.
Buffett once described the 50-year-old as: “The rare investment banker who puts himself in his client’s shoes.” A Cadbury spokesman said: “Until we have a credible offer that adequately reflects the strength of this business, there is nothing to comment upon”.
Hershey was last night unavailable for comment.