HERSHEY, Pa. (
and the trust that controls it are close to making a final decision on whether to bid for U.K. candy maker
Wall Street Journal
reports, citing several people familiar with the matter.
The key uncertainty the two parties face is the fate of Hershey's credit rating, currently put at investment grade with a negative outlook by Standard & Poor's. This could worsen if Hershey takes on about $10 billion in debt, which it would need to raise in order to challenge
existing $16.5 billion bid for Cadbury, the people told the
Meanwhile, talks with third parties, such as Italian chocolate giant
, for a joint bid have been put on hold and there have been no recent talks with Swiss food giant
, the people added.
The Hershey trust is more willing to surrender the investment-grade rating and dip down into "BB" category rather than issue billions in new equity, the
reports. Spokesmen for Hershey and the trust declined to comment for the newspaper.
banker Byron Trott is reportedly lining up a group of wealthy investors to support the potential deal, the people said. These unidentified investors could provide billions of dollars in cash in exchange for equity, along with what one person told the
was a "debt bridge" until Hershey could arrange a new loan.
It was reported Wednesday that Kraft
to its hostile takeover bid for Cadbury, according to EU regulators, as a way to soothe antitrust concerns.