Hershey buyers push bid

Cadbury-Schweppes and Nestle are reported to have struck agreement on the brands and assets each would undertake if their joint bid for Hershey Foods is accepted.

As the two European sides continue to struggle over clarification of the bids structure, the Financial Times reports that the companies are still in talks with the charitable trust controlling the US chocolate maker to appeal against a temporary injunction blocking any sale.

Nestle is believed to be ready to accept a demand that Cadbury should secure more than the brands and assets it sold or licensed to Hershey in 1988.

British chocolate-maker, Cadbury, sold three US manufacturing plants, one of which has since closed, along with the US licence to brands including Dairy Milk, Fruit & Nut and Creme Eggs, as well as its US brands Peter Paul Almond Joy and Mounds bars.

However, Cadbury wants to ensure that it has room to expand in the market, and consequently wants to ensure the right to more brands as well as sales and distribution channels.

Cadbury is thought ready to commit about £3 billion (€4.77bn) to a Hershey deal - equivalent to up to 46 per cent of the $10bn-$12bn analysts say Hershey is worth.

Such a deal is a good way for Nestle to get around US ante monopoly laws, which would currently only allow the Swiss company to invest in 55 per cent of the Hershey business.

Industry observers close estimate that the deal under consideration could leave Nestle with less than the 43 per cent market share that Hershey currently owns.

The structure of the bid is still to be clarified, but would have to be carefully thought out if both sides are to avoid paying hefty tax charges as well as staying on the right side of the UK competition authorities.Speculation is also growing that the joint bid could draw the attention of the other major US player, Kraft. However analysts believe that the company is not presently in a position to make such a bid.