Nestlé fuels Cadbury bid speculation

NESTLÉ was again mooted as a potential rival to consumer goods giant Kraft in its £10.1bn bid to acquire confectioner Cadbury yesterday, after boosting its balance sheet by selling its stake in eye care group Alcon.

Speculation exploded in the City about the ramifications of the sale, with analyst Warren Ackerman at Evolution Securities noting that the firm will have “plenty of firepower to do sizeable acquisitions despite [its] comments that this is not on the agenda”.

Ackerman added that the most likely scenario would be for Nestlé to team up with Hershey on a counter-bid, buying Cadbury’s chewing gum business itself and leaving the chocolate operations for its US counterpart.

Though Cadbury chairman Roger Carr has dismissed Kraft’s current offer as “derisory”, he has indicated he would be more open to a deal with Hershey, labelling the company a better cultural fit.

Kraft is widely expected to table an improved bid for the chocolatier before a 19 January Takeover Panel deadline. Cadbury shares gained almost a per cent yesterday on the London Stock Exchange in anticipation of a higher offer, reaching 805p by close of play.

Cadbury is due to release a hotly-anticipated trading update at the end of next week.