Cadbury suitors Ferrero and Hershey would likely break the UK confectioner up into separate businesses if a mooted bid for the company succeeds, an Italian newspaper reported.
Italian chocolate maker Ferrero and U.S.-based Hershey said on Wednesday they were reviewing a possible offer for Cadbury, which is the subject of a hostile 9.9 billion pound ($16.5 billion) bid by U.S. food group Kraft .
Unlisted Ferrero is mainly interested in Cadbury's gum and candy division, a unit worth about 5 billion euros ($7.4 billion), business daily Il Sole 24 Ore said on Friday. It said the family that controls the Italian firm has historically shown little interest in sharing management.
A source close to Ferrero told Reuters on Friday the company was still evaluating all options concerning Cadbury. Any bid would have to be friendly, an Italian source close to the matter had said on Thursday.
A London trader said traditionally conservative Ferrero would not want to go hostile and would prefer to proceed with the support of Cadbury's board.
A friendly offer would also give Ferrero access to Cadbury's books so it could do due diligence, something its financing banks may demand because the company is not active in the gum and candy market, the trader said.
A Ferrero spokesman declined to comment.
The Ferrero family should meet advisers Mediobanca and Rothschild in coming days to discuss a possible deal, the newspaper said.
Ferrero has about 2 billion euros in cash that could be used in a bid, it added.
Italy's two biggest banks, Intesa Sanpaolo SpA and UniCredit SpA , could be among those interested in financing the deal, the newspaper said. The banks declined to comment.
However, Ferrero would like to take on little debt in a possible takeover, Il Sole 24 Ore said. Bank financing would pay for about half of Ferrero's bid.
Newswire Dow Jones cited people with knowledge of the situation as saying Ferrero and Hershey are still deciding whether to bid for all of Cadbury or only a large stake.
At 1133 GMT, Cadbury shares were trading up 0.6 percent at 795 pence, outperforming a falling market.
(Reporting by Victoria Howley and Ian Simpson; editing by John Stonestreet)
($1 = 0.6722 euro = 0.6002 pound)