Suitors Vie For British Candy Maker Cadbury

One of Britain's most revered companies is under threat of a takeover. Candy maker Cadbury already rejected a hostile takeover bid by U.S. giant Kraft Foods. Hershey has confirmed it is considering a joint takeover bid for Cadbury, along with Italian chocolate maker Ferrero. But it seems the offers may need to be considerably sweetened to persuade the British.

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The next deal involves Britain's most cherished chocolate maker, Cadbury. As we've been reporting in our chocolate news, Cadbury a few weeks ago rejected a hostile takeover bid by the U.S. food company Kraft. Now Hershey says it is considering a joint takeover bid for Cadbury, along with Italian chocolate maker Ferrero. Both offers may need to be considerably sweetened to persuade the British, as NPR's Rob Gifford reports.

ROB GIFFORD: The Brits may have sold off Rolls Royce to the Germans and Manchester United may now play soccer under American owners, but hey, hands off British chocolate. It's an article of faith here that, never mind the Swiss or the Belgians, British chocolate is the best in world and British children have been waking up on Christmas morning since the Norman invasion with a big bar of Cadbury's milk chocolate in their stocking - well, since 1824, anyway, when Quaker John Cadbury founded the firm selling hot chocolate as an alternative to alcohol.

Cadbury built a model village called Bournville that set the standard for workers housing of the day and where the main factory was known as the factory in the garden. So it's perhaps not too surprising that John Cadbury's great-great-granddaughter Felicity Loudon expressed shock that such an iconic British firm might, as she put it, disappear into an American plastic cheese company.

Ms. FELICITY LOUDON: I don't know that they would understand the history of Bournville Village, therefore, the great of the philanthropy that went with it. I don't think they'd understand that it was a garden factory that was created and that every single house had a garden with a vegetable patch with an orchard and that my great-great-grandfather thought that nobody should live or work where a rose cannot grow.

GIFFORD: The confirmation yesterday that U.S. chocolate maker Hershey was looking at the possibility of making a bid for Cadbury has added a little spice to the chocolate. Not to be outdone is the torch bearer of paternalistic, mustachioed chocolate makers, founder Milton Hershey was also well-known for caring for his workers and for establishing a long tradition of philanthropy.

Analyst David Buik of BGC Partners in London says the likely need for layoffs -or redundancies, as they're known here - might make a Hershey-Cadbury combination less likely.

Mr. DAVID BUIK (Analyst, BGC Partners): If a business is a business, you have to take the emotion out of it. Both would have to implement huge cost-cutting exercises which encompasses redundancies, which is inevitable. And that appears to be against the culture of both companies, therefore, I don't understand the rationale.

GIFFORD: Illinois-based food giant Kraft made an initial offer of about $17 billion for Cadbury's in September, which was rejected. Kraft then reiterated its offer at a similar price on November 9th, prompting Cadbury to call the offer derisory. Still, analyst David Buik's money is on Kraft winning the battle.

Mr. BUIK: Kraft really needs this deal for the simple reason that their figures were very disappointing in the third quarter, and they believe that the acquisition of Cadbury would deliver significantly increased shareholder value. Most people can understand the rationale behind. What has surprised us is that a more realistic bid has not already been tabled.

GIFFORD: A new bid may be in the pipeline from Kraft. Hershey and Italian chocolate maker Ferrero said they may make a further announcement in due course.

ROBBINS: Gifford, NPR News, London.

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