Kraft has set a deadline of Jan. 5 for its current offer to be accepted by Cadbury shareholders. Several of the U.K. confectioner's investors say Kraft will likely have to raise its offer to attract interest.
"I don't know why people would tender into the [current] offer that is lower than the market [image-nocss] price when they can just sell their shares in the market," Roy Behren, a portfolio manager for Merger Fund, which focuses on merger arbitrage and holds Cadbury shares, told Dow Jones. "People are speculating that either Kraft will raise their bid or there will be a competing bid from either Hershey or Ferrero or potentially Nestle."
To that ends, the trust that controls chocolate company Hershey is reportedly mulling taking a run at Cadbury on its own, according to a report in the New York Post.
A person with direct knowledge of the discussions told the newspaper the trust appears more willing to risk its investment-grade rating in order to finance a solo bid for Cadbury, which went into play over the summer when Kraft made its unsolicited, $16-billion bid for the company.
The trust, which controls 80% of Hershey's voting shares, could meet as early as this week to discuss the matter, according to the report, which would involve Hershey having to borrow big in order to finance the purchase of a company double its size.
Meanwhile, Kraft can choose to extend the Jan. 5 deadline and is very likely to do so, a move that isn't unusual in such deals, according to Dow Jones. More closely watched will be Jan. 19, the deadline for Kraft to raise its bid.
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