The Italian chocolate maker Ferrero has decided to withdraw from discussions with the US confectionary company Hershey over a joint bid for Cadbury, it has been reported.
According to a report in the Wall Street Journal, a high-profile bidding match against US food giant Kraft Foods would not have come in line with the strategy of family-owned Ferrero, which is headquartered near Turin in Piedmont, Italy.
Ferrero reportedly informed its advisers at Mediobanca on Tuesday that it was dropping its bid, despite having lined up a syndicate loan of Ôé¼4.5 billion from Italian banks UniCredit and Mediobanca.
It is understood that the groupÔÇÖs chairman, Michele Ferrero, was opposed to making an offer because it involved too much debt for a company that has traditionally not made acquisitions.
The withdrawal of Ferrero reduces the chance of a counter bid for Cadbury emerging ahead of a UK Takeover Panel deadline for competing offers in late January.
It has also cast doubt on whether Pennsylvania, US-based Hershey will now be in a position to submit a counter offer for Cadbury, having so far struggled to assemble a bid. Last week, the Swiss food group Nestl├® ruled itself out of a Cadbury auction. Hershey officials have yet to comment.
The decision by Ferrero coincides with the publication of London-based CadburyÔÇÖs final defence document against Illinois, US-based Kraft, which has made a bid of ┬ú10.5 billion for the UK confectioner.
ÔÇ£The board has unanimously rejected KraftÔÇÖs wholly inadequate offer and continues to recommend that shareholders take no action in relation to the offer,ÔÇØ a statement released by the company read.
It went on to highlight CadburyÔÇÖs strong performance in 2009, which it said was ÔÇ£well ahead of market expectationsÔÇØ. It also drew attention to sustained and ongoing investment to support its long-term revenue growth target of five to seven per cent through investments in key growth drivers including business in emerging markets and innovation.
Todd Stitzer, CadburyÔÇÖs CEO, called the companyÔÇÖs performance in 2009 ÔÇ£outstandingÔÇØ, and went on to say: ÔÇ£We generated good revenue growth despite the weakest economic conditions in 80 years.ÔÇØ
The statement went on to call KraftÔÇÖs offer ÔÇ£even more unattractive today than it was when they published the offer in DecemberÔÇØ.
Roger Carr, chairman of Cadbury, attacked KraftÔÇÖs management and business model, saying: "Over half the offer consideration is in the form of Kraft shares, exposing our shareholders to KraftÔÇÖs low growth conglomerate business model, its long history of underperformance and its track record of missed targets.ÔÇØ
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