Cadbury warms to Hershey tie-up - US group seen as better cultural fit than Kraft

Cadbury warms to Hershey tie-up - US group seen as better cultural fit than Kraft
By Jenny Wiggins
Copyright The Financial Times Limited 2009
Published: November 27 2009 23:30 | Last updated: November 27 2009 23:30
http://www.ft.com/cms/s/0/835e0b56-db97-11de-9424-00144feabdc0.html


Todd Stitzer, Cadbury chief executive, has signalled support for a possible tie-up with Hershey, declaring the US confectioner a better cultural fit with the chocolate maker than Kraft, the food conglomerate that has launched a hostile £10bn bid.

Hershey, which has owned the licence for the Cadbury brand in the US since 1988, is contemplating a bid for Cadbury after the decision by Kraft of the US this month to go hostile. If Hershey can finance the bid, it is likely to make a friendly offer.

Mr Stitzer told the Financial Times that the ethical values of the Cadbury brand – founded by Quakers who marketed tea, coffee and cocoa drinks as alternatives to alcohol – were similar to those of Hershey.

Milton Hershey, the US company’s founder, was inspired by Cadbury’s Bournville village in building his Pennsylvanian company town, Hershey.

“Both companies were founded by men of principle and vision who created company towns and supported charitable causes . . . There is quite a lot of cultural similarity,” Mr Stitzer said on Friday. “I would prefer Cadbury to be in an environment where its values and principles could continue.”

Mr Stitzer suggested that Cadbury’s values, which he said included Fairtrade certification for some of its chocolate brands, could be lost if it were bought by Kraft, which is better known for processed cheese, instant coffee and bacon.

“I think there’s a worry that in a much larger, less focused organisation that those values don’t get nurtured in the right way,” he said. “Ask the folk at Terry’s whether or not the spirit of the family that founded Terry’s is still alive . . . I think not.” Terry’s Chocolate Orange was acquired by Kraft in 1993.

There is no sign yet that a counter-offer from Hershey, or another possible bidder such as Italy’s Ferrero, will be forthcoming. Kraft went public with a £10.2bn cash and stock offer for Cadbury in September after Roger Carr, Cadbury chairman, rejected an unsolicited approach from Kraft’s chief executive Irene Rosenfeld in August.

Kraft is due to post its offer document to Cadbury shareholders by December 7 and will then have 60 days to convince them to accept the bid. Cadbury shares closed up 3p at 806p. Kraft’s were down 13 cents at $26.67 in New York trading, making its offer worth £9.88bn.