Possible counter-bid for Cadbury

Cadbury produces some of the UK's best-known chocolate bars

Confectionery groups Ferrero and Hershey have confirmed they are considering a possible joint takeover bid for the UK's Cadbury.

Italy's Ferrero said it was in the "preliminary stages" of looking at its options, while US firm Hershey said making a bid was only a possibility.

Birmingham-based Cadbury has declined to comment on the news.

Earlier this month, it rejected a hostile £9.8bn offer from US food giant Kraft, calling it "derisory".

Confectionery giant

Analysts said Ferrero and Hershey had joined together because each could not afford to make bids for Cadbury on their own, but that Kraft remained the frontrunner.

CADBURY John Cadbury, a Quaker, opened shop in Birmingham in 1824, selling tea, coffee and hot chocolate - as an alternative to alcohol Dairy Milk brand introduced in 1905, with Milk Tray coming 10 years later Merged with Schweppes drinks business in 1969. Its drinks arm was spun off in 2008 Employs about 45,000 people in 60 countries Check Cadbury's share price

"Significant questions remain regarding how any deal [from Ferrero and Hershey] might be put together, not least in terms of product and/or geographical segmentation," said Jeremy Batstone-Carr, analyst at Charles Stanley.

"The likely complexities associated with a rival approach for Cadbury [from Ferrero and Hershey] in purely practical terms leave us strongly of the view that Kraft remains the strongest rival, but that it will need to increase its offer in order to win control."

Cadbury is the world's second-largest confectionery business, with full-year revenues of £5.4bn in 2008.

Ferrero, best known for its Ferrero Rocher chocolates and Nutella chocolate spread, had revenues last year of 6bn euros ($9bn; £5.3bn), while Hershey's were $5.1bn (£3bn).

Kraft, which owns food brands including Philadelphia soft cheese and Maxwell House coffee, saw its 2008 revenues total $42.2bn.

Shares in Cadbury were up 1.5%, or 11.50 pence, to 799.5p in afternoon trading.