Kraft’s attempt to buy Cadbury has gone from Cadbury trying to tease more money from Kraft, to Cadbury rejecting Kraft’s firm offer, to Kraft going into hostile-takeover mode, setting the stage for a long boardroom battle for chocolate control.
Does that sound as complicated as nougat yet? Now, enter Hershey. North America’s largest chocolate manufacturer (and the brand responsible for 10% of my diet) has been eyeing Cadbury for weeks and might partner with Ferrero, the Italian chocolate-maker responsible for Nutella, to make a run at the coveted confectioner.
Both Hershey and Ferrero have been mum, but the reports are likely to force Kraft to raise its offer, which could lead to a “Barbarians at the Gate” slugfest reminiscent of the leveraged buyout of RJR Nabisco 20 years ago.
The Guardian notes that Hershey already has a relationship with Cadbury – a license to create Cadbury chocolate, including Dairy Milk bars and those addictive Crème Eggs, in the US – and Ferrero is looking to bolster its presence in Europe -- mainly Italy, France, and Germany -- with Cadbury’s British stronghold.
But while Cadbury is not keen on Kraft, Hershey and Ferrero might not be its savior either. The Guardian cautions:
A joint bid would inevitably involve carving up Cadbury's assets, creating more uncertainty for the company's employees. Hershey is likely to be keen to get its hands on Cadbury's gum operations – particularly Trident, which is attempting to take on the dominance of Wrigley in the US.
Cadbury employees might not be thrilled with the prospect of a new owner, but stockholders are probably licking their lips. In the case of RJR Nabisco, the company was going to be taken private at $75 a share, but warring investors drove the price up to $112 before a final settlement of $109 was reached.
And if an even larger food conglomerate like Nestle or Unilever jumps in, as has been rumored, expect things to get even sweeter.