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Nestlé announcement plays into the hands of Kraft Foods

US giant Kraft Foods is today in prime position with regards to a potential takeover of UK chocolate manufacturer Cadbury. Despite speculation that Nestlé was about to enter the bidding the company has today confirmed it will neither bid on its own or as part of a consortium. This announcement puts more pressure on US outfit Hershey which was seen by many as a potential consortium partner with Nestlé.

Even though the current Kraft Foods offer is unlikely to be successful, and is indeed well under the current Cadbury share price, analysts believe that an increased offer of around £8 a share may well be enough to capture this well-known and historic company. It is expected that Hershey, which is actually smaller than Cadbury, will struggle to raise the necessary finance to make an offer in its own right. Even though analysts believe that Cadbury saw Hershey as the perfect "white knight" the chances of the company stepping forward with an acceptable offer appear to be lengthening.

Kraft Foods has been playing its cards close to its chest for some time now and this coy and secretive strategy appears to have worked out perfectly so far. While there is nothing to stop other potential bidders entering the fray, nobody else has really shown their hand in a serious manner.

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