Chocolate Wars: Hershey Moving Forward With Plan to Bid on Cadbury
Hershey's is moving forward with getting funding to make a big for Cadbury, hoping to beat out Kraft's hostile takeover big. Bloomberg reports:
Hershey has been in talks with credit-ratings companies in recent days about how to structure a bid without imperiling its investment-grade debt rating, said the people, who declined to be identified because the talks are private. It’s also been drafting commitment letters with its lenders, JPMorgan Chase & Co. and Bank of America Corp., to secure a multi-billion-dollar loan package, the people said.
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"This is an awful big prize," Jack Russo, an analyst with Edward Jones & Co. in St. Louis, said in an interview. The benefit of buying Cadbury "just depends on how they structure the deal. This is a chance for them to boost their presence internationally." Russo recommends holding Hershey stock.
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Kraft has until Jan. 19 under U.K. law to raise its offer, and Hershey may conclude that a higher Kraft bid puts the maker of Dairy Milk chocolate and Creme Eggs out of its reach, the people said. Hershey will have another four days, until Jan. 23, to decide whether to enter the fray. In addition to financing the bid through loans and new Hershey shares, the company is also trying to raise cash by selling equity stakes to new investors, the people said.
The Hershey Trust owns 31% of the common stock of Hershey, and and controls 80% of the voting power of Hershey Co. What the trust says, goes. And the trust says: go buy Cadbury.
