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Is Hershey preparing to go it alone?

It looks as though the attractions of Cadbury are proving too much for the Hershey charitable trust to ignore with suggestions in the financial markets that the company is preparing a stand-alone bid for Cadbury. If a bid is forthcoming it will need to be announced before the deadline date of 23 January although it is known that Hershey has instructed various investment managers to locate and sign up equity partners to the deal.

There is a suggestion that the Hershey trust is looking to make an investment of $1.25 billion with the rest probably a mixture of shares and debt. It is debatable as to whether a significant increase in Hershey's debt, and its risk profile, may have an impact on the company's investment grade credit status. Whatever happens over the next few weeks there is no doubt that Hershey will be taking a big gamble if it decides to bid for Cadbury although it is known that the Cadbury management pinpointed the company as a potential "white knight" some time ago.

Each day sees new twists and turns in this particular takeover saga and while it looks as though Hershey is on the verge of making an offer, nothing is guaranteed.

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