Bar could be set too high for a Hershey Cadbury bid

BID speculation over Cadbury was reignited last night amid reports that US giant Hershey was pulling together an offer of its own for the UK confectionery group.

A source claimed Hershey was hoping to avoid a bidding war by waiting for Cadbury's shareholders to make a stand on US rival Kraft's existing 10.5 billion offer.

However, analysts did not believe that Hershey has the money to finance a buy-out bid.

The development came as Kraft's chief executive officer, Irene Rosenfeld, went door-to-door in London to visit Cadbury's shareholders in a ploy to win them over to the bid.

Embarrassingly for Rosenfeld, many of the investors kept their doors shut, feeling Kraft's hostile bid too low.

Kraft needs to win over Cadbury's shareholders by 2 February, with a 19 January deadline in which to increase its bid.

"It is highly possible that we will have some dialogue with Kraft if they come up with a higher offer next week," said a Top 20 Cadbury investor, who declined to meet Rosenfeld.

Together with Italian chocolate-maker Ferrero, Hershey informed the London Stock Exchange in November that they were interested in acquiring Cadbury.

However, it is understood that Ferrero is no longer interested in bidding.

Swiss food giant Nestl also took itself out the picture last week when it said it would not enter the auction for Cadbury.

Business Secretary Lord Mandleson is expected to wade in to the issue, as unions call for Cadbury shareholders to resist Kraft's takeover attempt. He was due to meet a group of institutional investors today to discuss their role in foreign takeovers of British firms.