NEW YORK (TheStreet) — Speculation is spreading that Nestle(NSRGY Quote) is a step closer to becoming the next bidder for the much-coveted British confectioner Cadbury(CBY Quote), after a sequence of actions that signaled Nestle could be clearing the decks for an offer.
The speculation was triggered today after Nestle agreed to sell off a majority stake in its Alcon eye-care unit and announced a smaller-than-expected share buyback program. The moves could be sign that Nestle is shoring up its resources for a competing offer against food giant Kraft’s(KFT Quote) 9.8 billion pound, or $16.3 billion, cash-and-shares offer for Cadbury, say analysts.
Nestle, whose household brands include Nescafe and KitKat, announced Monday that it will sell a 52% stake in Alcon to Swiss drug maker Novartis(NVS Quote) in a $28 billion deal. The proceeds from the deal will help it launch a new 10 billion Swiss franc or $9.64 billion share buyback program for two years, once its existing 25 billion Swiss franc program is completed this year.
“This implies that Nestle has made use of just $10 billion of the forecast $28.5 billion stake sale proceeds and adds to market speculation that Nestle might be in the process of building a ‘war chest’ to enter the Cadbury fray,” said Charles Stanley analyst Jeremy Batstone-Carr.
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