By James Quinn in New York and Ben Harrington Published: 8:15AM GMT 18 Nov 2009  Ferrero, the maker of Ferrero Rocher chocolates, is looking to team up with Hershey in a bid for Cadbury.  America confectioner Hershey and Ferrero, the Italian chocolatier, are considering a joint bid for Cadbury in a move that looks set to rekindle one of the year’s biggest takeover battles. Shares in Cadbury were up almost 2pc in early trading in London.  Hershey, the firm behind the eponymous chocolate bar, and Ferrero, which makes the iconic Ferrero Rocher chocolates, have held talks in recent weeks about trumping the £10bn bid for the British sweet company by Kraft, the American food giant.  NM Rothschild has been mandated to advise Ferrero along with Watch Hill Partners, another boutique. Byron Trott, the former Goldman Sachs banker who set up his own firm backed by Warren Buffett, is understood to be working with Hershey. .  Sources said the discussions are at an early stage and may not result in a bid being tabled. But the talks are the first piece of evidence that rival bidders for Cadbury may emerge.  Insiders said that there is debate between the companies about which party would take possession of Cadbury’s high-margin gum and candy businesses such as Trident and Halls.  Hershey has been seen as a potential counter-bidder ever since Kraft’s interest in Cadbury became public in September. The Pennsylvanian chocolate company is known to be keen to expand overseas to diversify its sales which are 85pc based in America. However, analysts have said from the start that it would struggle to muster the financial firepower to launch a bid.  Although a joint bid with another company makes sense, the Hershey Trust, which controls the company, is thought to be unlikely to want to back a move that could dilute its holding.  Ferrero, which is privately-owned and makes Nutella chocolate spread and Tic Tacs, is far smaller than Kraft with just €6bn (£5.3bn) of sales last year. Michele Ferrero, the head of the family, is said to be determined to maintain the firm’s independence while his sons, Pietro and Giovanni, are keen to expand with a partner.  The Daily Telegraph on Tuesday first confirmed Ferrero’s interest in Cadbury. That report prompted a note from Nomura Securities which said: “As an entirely family-controlled entity it is very difficult to gauge Ferrero’s thinking here . . . But being left on the sidelines of consolidation taking place around them can’t be an attractive proposition.”  Kraft unveiled its £9.8bn hostile bid for Cadbury on November 9, valuing the shares at approximately 726p based on last night’s prices, against Cadbury’s current price of 788p.  In its formal proposal, Kraft essentially maintained the offer it proposed in September when it first publicly announced its intention to buy Cadbury. Cadbury swiftly rejected the hostile offer, calling it “derisory”.  Under Takeover Panel rules, the company has until December 7 to posit its formal offer document to shareholders, and Cadbury must publish its defence document by December 21. Hedge funds, including Paulson & Co, have recently bought large stakes in Cadbury, on the expectation of a higher offer.  Ferrero and Hershey confirmed that they were looking at the company.
Cadbury shares rose in London on hopes that Hershey and Ferrero are planning    to trump Kraft, as the multi-billion pound battle for the Dairy Milk maker    takes another twist.