Despite the fact that US outfit Kraft Foods is currently the only company with a takeover bid on the table for Cadbury it would appear that the Cadbury directors and a number of UK banks are willing to back a counteroffer by Hershey. However, let's not forget there is also the figure of Ferrero in the background which has expressed an interest in Cadbury with rumours of a potential joint offer with Hershey. So why has Hershey suddenly become the big name in the frame?

Hershey is half the size of Cadbury and ultimately a merger of the two operations would treble the size of the Hershey market capitalisation. Whether the directors of Cadbury believe they will be able to take a more hands-on approach if the company was taken by Hershey is a point being discussed by many in the City, with Hershey emerging as the preferred bidder (at least unofficially) of the Cadbury directors.

Nevertheless, Hershey is very well-run outfit and one which itself has been on the end of a potential takeover offer over the last few years. A merger of the two operations, where there is little overlap between their UK and the US exposure, would offer significant benefits to both parties but then again so would the potential merger with Kraft Foods, which also has little exposure to the UK market.

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