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., according to British newspapers reports.
Both The Businessnewspaper and the Mail on Sundaysaid Cadbury and Nestle have discussed plans to carve up Hershey's assets between them.
The Businesssaid the talks centred on Nestle acquiring most of Hershey, with Cadbury picking up its own brands which are licensed to Hershey in North America.
Banking sources said 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 Mr 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 US chocolate confectionery market.