Big Nestle Bid for British Firm Fuels ‘Chocolate War’

Nestle SA presented a takeover offer for Rowntree PLC on Tuesday that valued the British confectioner at $3.9 billion and sparked expectations of a bidding war here between Switzerland’s top chocolate makers.

Rowntree, which also has been eyed by Jacob Suchard AG, called the takeover offer unwelcome.

“It is our intention to remain independent,” a Rowntree spokeswoman said, but the firm’s continued independence appeared less likely as Suchard responded angrily to Nestle’s move.

Suchard Chairman Klaus Jacobs said that his group might make a counter-offer and that Suchard no longer felt bound by an earlier goal to acquire only a 25% stake in Rowntree.

Earlier this month, Suchard amassed a 14.9% stake in the British firm after a sudden sweep of Rowntree’s shares in the open market.

“We have made it clear that we see our stake in Rowntree not as a financial one, but as a strategic one,” Jacobs said. “We will show the London market shortly how serious we are about Rowntree.”

Rowntree makes some of Britain’s most popular candies, including Kit Kat bars, Smarties and Polo mints, and has a strong presence in both the domestic and European markets. Its stock soared $3.18 on the London Stock Exchange to $17.30, closing above Nestle’s offer price of $16.64 a share.

“It’s going to be tough for Rowntree to fight this offer. . . . Nestle can easily sweeten the bid and would hardly notice it as far as their cash position is concerned,” said a London analyst.

Some analysts said they doubted that Suchard would be able to match Nestle’s offer in what has been dubbed the “chocolate war.” Suchard, which makes the Toblerone brand, paid only about $11.78 a share for its stake.

But, Jacobs said, “A Swiss does not give up so easily.”

This is not the first time the two Swiss chocolate makers have clashed over an acquisition. Suchard snatched Belgium’s Cote d’Or away from Nestle last year, analysts said, even though Nestle never publicly said that it was in the running.

Nestle, a conglomerate that produces coffees, soft-drinks and a wide range of foods, said it had picked up a 4.6% interest in Rowntree from open-market share purchases.

Managing Director Helmut Maucher said a merger with Rowntree would “create a major international confectionery group . . . better able to exploit new opportunities, particularly in Europe and the United States.”

Nestle’s bid for Rowntree is among Europe’s biggest ever.