Chocolate firm Ferrero has moved a step closer to joining the Cadbury bidding war after lining up a loan that could be used to back an offer, it was reported today.
Ferrero, which makes Ferrero Rocher and Kinder chocolate eggs, has discussed a $4.5bn loan with Italian bank Mediobanca, according to The Times in England.
Cadbury is currently the subject of a hostile bid from US firm Kraft and shareholders have until February 2 to accept its offer valuing the British confectioner at 764p a share, or €11.6bn.
Ferrero, which has already revealed a possible interest in a bid, is thought to be more likely to join forces with another bidder – possibly US chocolate firm Hershey – to try and rival the Kraft bid.
The difficulties of negotiating a partnership with another company and lining up funding are understood to have dampened enthusiasm for a rival offer, but the details of Ferrero’s loan indicates it is still possible.
According to The Times, which cites local reports in Italy, Ferrero had still not made up its mind about whether or not to throw its hat into the ring.
The number of potential bidders for Cadbury has dwindled recently after KitKat firm Nestle ruled out a counter-bid.
Cadbury has fought vehemently against the Kraft attempt for months, dismissing the offer as “derisory” and urging shareholders to support the company as an independent entity.
This week the Dairy Milk maker will publish trading figures showing strong sales for 2009, as it looks to convince investors of the firm’s strength.
Its last defence document saw it up long-term performance targets and issue higher profit margins guidance.
Kraft has until January 19 to decide whether to raise its bid further and an offer of more than 800p is thought to have more of a chance of enticing Cadbury shareholders.
But the Dairylea and Toblerone firm would need the support of Warren Buffett, whose Omaha-based Berkshire Hathaway investment vehicle owns almost 10% of Kraft, to up its offer.
Mr Buffet has already warned Kraft not to overpay for Cadbury and last week said shareholders should not be asked to write a “blank cheque” by issuing 370 million new Kraft shares to finance the bid.
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