Rivals 'discuss joint Hershey bid'

LONDON, England (Reuters) -- British confectionery and drinks group Cadbury Schweppes Plc has held talks with food giant Nestle SA about joining up in the auction for American chocolate icon Hershey Foods Corp., British Sunday newspapers said.

Both The Business newspaper and the Mail on Sunday said Cadbury and Nestle have discussed plans to carve up Hershey's assets between them.

The Business said the talks centred on Nestle acquiring most of Hershey, with Cadbury picking up its own brands which are licensed to Hershey in North America.

The Financial Mail on Sunday said it was unclear whether a tie-up between Nestle and Cadbury would involve a

jointly financed bid or Nestle bidding with an agreement to sell brands on to Cadbury later.

Banking sources told Reuters that Cadbury had retained investment bank Goldman Sachs to advise it in respect of the Hershey sale.

However, sources close to the company said it was never Cadbury's intention to take part in competitive bidding for the whole of Hershey, but rather to pick up the pieces that Nestle might have to divest in order to get regulatory approval for a takeover of Hershey.

No one at Cadbury was immediately available to comment.

Analysts and bankers see Nestle, the world food and drinks leader, as a front-runner in the auction for the famed maker of Hershey's Kisses in order to cure its weak position in the U.S. confectionery market.

Nestle chief executive Peter Brabeck rejected on Friday talk the firm would pay $12 billion for Hershey.

Brabeck also highlighted competition hurdles in the event of any takeover of Hershey as a combined Nestle-Hershey business would hold over half of the U.S. chocolate confectionery market.