Hershey shares fall on potential Cadbury bid; Diedrich likes Green Mountain bid; trading slows

By Cristal Cody

Tupelo, Miss., Nov. 25 - Shares of the Hershey Co. fell Wednesday after media reports that that chocolate maker's major shareholder, the Milton Hershey School Trust, had asked for approval from the Pennsylvania attorney general to bid for Cadbury plc.

In other situations, a coffee battle continued Wednesday over Diedrich Coffee, Inc., which determined that a rival bid for $32.00 a share in cash from Green Mountain Coffee Roasters, Inc. was superior to the offer from Peet's Coffee & Tea, Inc.

Meanwhile, trading slowed Wednesday ahead of the Thanksgiving Day break.

"There was nothing too exciting," a sellside source told Prospect News on Wednesday. "It was a little light today because of the holiday. There was a surge this morning, but it quieted down this afternoon."

Light volume also is expected on Friday after the markets reopen from the holiday break, the source said.

Stocks made a small advance.

The Dow Jones Industrial Average added 30.69 points, or 0.29%, to close Wednesday at 10,464.40.

The Standard & Poor's 500 index rose 4.98 points, or 0.45%, to 1,110.63, and the Nasdaq Composite index gained 6.87 points, or 0.32%, to 2,176.05.

Hershey considers next step

Shares of Hershey lost 72 cents, or 1.96%, to close Wednesday at $35.94.

Hershey, along with private Italian chocolate maker Ferrero International SA, reported earlier in November that the companies are considering a potential deal for British candy maker Cadbury, which is under a $16 billion hostile takeover attempt by Kraft Foods Inc.

Hershey Trust, which was set up by the company's founder, controls the majority of voting stock of Hershey, based in Hershey, Pa.

Representatives from the Pennsylvania attorney general's office did not return a call for comment on Wednesday.

Cadbury has rejected Kraft's bid of 300p a share in cash and 0.2589 of a Kraft share, which values Cadbury at less than 725p a share.

Northfield, Ill.-based Kraft faces a provisional deal review by Dec. 14 from the European Commission.

Cadbury's U.K.-listed shares closed up 3.00p, or 0.37%, at 811.00.

Kraft's stock ended Wednesday down 42 cents, or 1.54%, at $26.80.

Peet's to study bid over holiday break

Shares of Diedrich traded up above the latest buyout offer, but shares fell back some Wednesday to close off 69 cents, or 2.03%, at $33.22.

Diedrich's board had agreed to a deal with Peet's on Nov. 2 for $26.00 a share in cash and stock, but the offer now stands at $32.00 a share in cash on a rival offer from Green Mountain.

Emeryville, Calif.-based Peet's most recent bid had initially been valued at $32.00 a share in cash and stock, but the offer has fallen in value along with Peet's shares for a deal now worth $30.35 a share.

"Because it's a fixed ratio, as Peet's [stock] has gone down, their bid has gone down," a market analyst told Prospect News. "It's definitely not superior."

Peet's president and chief executive officer Patrick O'Dea said in a statement on Wednesday that as provided for in the merger agreement with Diedrich, it will over the next several days "consider all our alternatives and take the action we deem to be in the best interests of Peet's shareholders."

Green Mountain said Wednesday in a statement that at the request of Diedrich's board, its proposal includes a commitment to pay a reverse beak-up fee of $8.5 million.

Waterbury, Vt.-based Green Mountain said that it has "thoroughly evaluated the relevant regulatory process and is confident it can consummate the transaction promptly in early 2010. We remain firmly committed to this strategic combination and look forward to moving quickly in partnership with Diedrich to complete this transaction."

Irvine, Calif.-based Diedrich produces Gloria Jean's Coffees and operates a K-Cup single-serve coffee division that uses the popular gourmet Keurig brewing system.

Shares of Peet's gained 66 cents, or 2.01%, to close at $33.52 on Wednesday.

Green Mountain shares slipped 60 cents, or 0.94%, to $63.36.

Mentioned in this article:

Cadbury plc London: CBRY

Diedrich Coffee, Inc. Nasdaq: DDRX

Green Mountain Coffee Roasters, Inc. Nasdaq: GMCR

Hershey Co. NYSE: HSY

Kraft Foods Inc. NYSE: KFT

Peet's Coffee & Tea, Inc. Nasdaq: PEET

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