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LONDON, Dec 1 (Reuters) – Kraft Foods Inc (KFT.N) is
favourite to take over Cadbury Plc (CBRY.L) despite interest
from Hershey Co (HSY.N) and Ferrero, and talk of Nestle SA
(NESN.VX) involvement, said analyst Andrew Wood at Sanford
Bernstein.

“Kraft is still the favourite to get the deal done … but
not at the ’steal’ it had originally hoped,” said the top-rated
analyst in a note on Tuesday, which still said the right price
for Cadbury is 900 pence per share.

Wood said he believes a Hershey/Ferrero bid would fall short
but should force Kraft to pay a higher price, while Nestle’s
interest would only be on the coat-tails of a Hershey bid to try
to get back its KitKat brand in the United States.

“We think a merger of Cadbury and Hershey would be bad news
for Cadbury and its shareholders and would probably be rejected
by the shareholders,” Wood said.

Kraft made the only official bid for Cadbury in early
November. Its cash and shares offer values Cadbury at 717 pence
or 9.8 billion pounds ($16.1 billion), while Hershey and Ferrero
have said they are considering making bids.

Cadbury shares were up 0.1 percent at 807 pence at 0915 GMT
in a firmer UK stock market.

Cadbury has rejected the Kraft offer but Chief Executive
Todd Stitzer has warmed to a Hershey tie-up, saying in a weekend
interview with the Financial Times: “I would prefer Cadbury to
be in an environment where its values and principles could
continue.”

Kraft has until Dec. 7 to post its offer document to
shareholders and then will have 60 days to persuade them to
accept the bid under UK takeover rules. Kraft will have up to
Day 46 to raise its bid once the 60-day timetable has started.

Nestle has been cited by analysts as a possible bidder for
Cadbury, but is unlikely to bid alone for anti-trust reasons and
has been seen as a possible partner for Hershey. The Swiss food
group has declined to comment on Cadbury.
(Reporting by David Jones; Editing by David Holmes)
($1 = 0.6070 pound)
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