Nestle looking to emerging markets for confectionery buys

Nestlé claims its confectionery business is large enough to enable it to compete in the global sector even if Kraft Foods takeover bid for Cadbury is successful, and that its sights would be set on seeking smaller acquisitions in emerging markets.

Subsequent to pulling out of the bidding for the British confectioner, the global player stated yesterday in a conference call that it is also interested in smaller purchases to expand its chocolate business.

ConfectioneryNews.com previously reported Kepler Capital Markets analyst Jon Cox’s prediction that Nestlé was potentially interested in Swiss manufacturer Lindt & Sprungli as a takeover target, with Cox maintaining that Lindt was in a weak state due to the negative impact of rising cocoa prices.

Cox claimed at the time that Lindt was an ‘obvious' takeover target for the global food group:

While many companies are probably interested in Lindt, I think Nestlé would be a closer cultural fit compared to a US company.

Nestlé lacks a global premium chocolate brand and I think it is now or never,” Cox told this publication.

Nestle this week agreed to buy Kraft’s North American frozen pizza business for $3.7bn, saying it had long been interested in moving into that segment, with Kraft claiming that it intends to use the net proceeds from the sale to sweeten its offer to Cadbury shareholders.

Yesterday, Cadbury’s share price briefly fell below the level of Kraft's bid for the first time, falling to 770p. The bid is currently valued at 771p.

Following Nestlé’s withdrawal from the bidding, it is still possible that Hershey or Ferrero could put forward an offer, both having expressed their interest in Cadbury in November, but, according to media reports, sources close to the situation claim it is looking unlikely either confectionery company could secure the necessary funds to make a rival bid.