Cadbury, Nestlé to fight it out for Adams

- Last updated on GMT

Related tags: Chocolate, Confectionery, Cadbury plc, Hershey, Cadbury schweppes

Cadbury and Nestle, erstwhile partners in a bid for Hershey, are
likely to face off against each other in the auction for another US
confectionery group, Adams. But other major bidders such as PepsiCo
cannot be ruled out.

When the Hershey Foods business was put up for sale earlier this year, the front runners for the company were thought to be the European firms Cadbury Schweppes and Nestle.

The two companies were reported to have lined up a joint bid for the Hershey business - a bid which of course came to nought when the iconic US confectioner was taken off the market.

But the temporary truce between the two companies over Hershey is all but forgotten now, as Nestle and Cadbury are preparing rival bids for another US confectionery group - chewing gum maker Adams.

The confectionery business of pharmaceutical company Pfizer has long been thought to be a target for Cadbury, which has added a number of chewing gum and sugar confectionery units to its business over the last few years. Nestle, on the other hand, has a much smaller interest in sugar confectionery than in chocolate, but may see Adams as a means of strengthening its foothold in the US now that Hershey is no longer available.

According to a report in the Financial Times​, Cadbury and Nestle are likely to be the leading contenders for Adams when the first round of bids is made later this month. Wrigley, which made the highest bid for Hershey, would not be able to buy Adams outright because of competition concerns in the US, but some of its foreign assets could be of interest, while Hershey itself is no longer a credible force after the sale fiasco.

Kraft Foods, which was also thought to be interested in Hershey, is another group more interested in chocolate than chewing gum, but could perhaps try to pick up some of Adams' sugar confectionery brands.

The report also claims that PepsiCo and Colgate-Palmolive have been looking into a possible acquisition of Adams, but there is as yet no indication of whether they will bid.

Although Nestle could almost certainly offer to pay more for Adams than Cadbury, the business is a much better fit for the UK group, which already owns Hollywood chewing gum in France, Dandy in Denmark, Bazooka in Argentina and Sportlife in China, and would love to add Adams' Trident brand to its portfolio.

Whether it would be as interested in the health-related brands also owned by Adams - such as Halls cough sweets -remains to be seen, but the likelihood is that whoever buys Adams will almost certainly look to sell on some part of the business to another buyer.

One to watch with interest.

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