Hershey may explore solo bid for Cadbury

The Hershey Co. is exploring a solo bid for British candy-maker Cadbury P.L.C. after a joint bid with Italy's Ferrero S.p.A. did not get out of the gate, according to published reports.

Hershey and candy-maker Ferrero, which also makes Nutella spread, had discussed a joint bid for Cadbury and arranged financing, but those talks collapsed Tuesday.

A solo bid for Cadbury - whose products include Halls cough drops, Dentyne and Trident gum, and Swedish Fish - would be expensive for Hershey, based in central Pennsylvania's "Sweetest Place on Earth."

Kraft Foods Inc. has offered $17.6 billion for Cadbury, a bid Cadbury executives consider hostile and dismiss as too low for a company with 10.5 percent of the global chocolate market and 14 percent of the global gum market.

Yesterday, Kraft boosted its full-year profit outlook for the second time in two months, after logging strong operating gains as it spent more on marketing its core brands.

Kraft, whose products include Maxwell House coffee and Philadelphia cream cheese, has trimmed its product lines to focus on more profitable products. The nation's largest food company now anticipates 2009 earnings of at least $2 a share, compared with an earlier forecast for a profit of at least $1.97 a share.

Hershey would be competing with Kraft's $17.6 billion bid, even though Hershey's stock market capitalization - the value of the firm itself - was $8.1 billion on Wall Street yesterday. Hershey's main products are its eponymous chocolate bar, as well as Reese's peanut-butter cups, Jolly Rancher, and other candies.

Hershey shares fell $1.14 in trading yesterday on speculation that the company would go it alone in a Cadbury bid. The stock had risen $1.57 Tuesday on speculation it might drop an interest in Cadbury.

Tim Reeves, spokesman for the Hershey Trust, which owns a controlling interest in the company, had no comment yesterday on reports from the Associated Press and the Financial Times that Hershey was considering a solo bid and could make a decision in two weeks.

The trust finances an expense-free school for needy children in Derry Township, Pa., that is considered one of the largest such residential schools in the world.

The school enrolls about 1,800 and has expanded rapidly since a Dauphin County judge ruled in 1999 that the trust could not redirect its money to spend millions on an educational research institute instead of schooling.