Cadbury hits new high as bidders circle

Speculation of a bid battle for Cadbury between Kraft Foods and other rivals who are considering making takeover offers lifted shares in the British confectioner to a new high, analysts said on Monday.
Most of the other big players in the global confectionery industry — U.S.-based Hershey Co, Italy's Ferrero and Switzerland's Nestle AG — are now weighing bids themselves, according to Reuters sources and media reports.
"We think the probability of a competitive auction for Cadbury has increased," said analyst Martin Deboo at brokers Investec Securities.
Many analysts doubt whether either of these three would bid alone, but possible combinations of them could trump Kraft's current cash and shares 9.9 billion pounds ($16.4 billion) bid or push the American food giant into a higher offer.
Kraft made its cash and shares bid for Cadbury earlier this month, which currently values Cadbury shares at around 723p, and may raise its bid if other rival bidders emerge, said a source familiar with the situation late Sunday.
"We still believe Kraft is in the driving seat and it will increase the cash component of its bid to 4 pounds bringing its offer up to 8.26 pounds," said analyst Jon Cox at Kepler Securities. Kraft's current bid is made up to 300 pence of cash and the rest in new Kraft shares for each Cadbury share.
He is unconvinced about Hershey's funding ability to launch a bid and even a combined deal with Ferrero would be hard pressed to get the finance.
Although Nestle can easily raise the cash, it would have big anti-trust obstacles especially in the UK, he added.
With the chance of a competitive auction for Cadbury rising, its shares rose over 2 percent to a high of 819-1/2 pence before last trading up 1.6 percent at 813 pence at 1204 GMT, or nearly 13 percent above Kraft's current bid at 723p.
"Acquiring Cadbury would be an impossible task for Hershey alone but might be more manageable in the context of other interested parties," said analyst Jeremy Batstone-Carr at brokers Charles Stanley.
He points out Nestle might be encouraged to make a joint offer for Cadbury in part based upon the fact that Hershey holds the lucrative license to distribute its own Kitkat product in the U.S. and a deal with Hershey could see that return.
Investec's Deboo says with a possible competitive auction for Cadbury increasing he is raising his target price for Cadbury shares to 810p from 785p and is raising his estimate of Kraft's takeover value of Cadbury to 820p from 800p, while he still sees a standalone fair value for Cadbury at 750p.
Kraft has until December 7 to publish its official offer document and post to Cadbury shareholders, which will then trigger a 60-day takeover timetable under UK rules.