Italy's Ferrero and U.S.-based Hershey are reviewing options over a possible bid for Cadbury , but hostile bidder Kraft's $16.8-billion offer is still seen as the front runner.

Hershey and family-owned Ferrero, the maker of Nutella chocolate spread, both said separately on Wednesday that there could be no assurance that a proposal or offer for the British confectioner would emerge.

The two were asked by the UK Takeover Panel to clarify their intentions after Reuters and other media reports said the two were discussing a joint bid, news which pushed Cadbury's shares higher earlier in the day.

The Ferrero and Hershey statements gave no hint they may be working together on a joint bid. Analysts and investors doubt the two could mount a bid to rival the hostile $16.2 billion cash-and-share offer from Kraft.

Analysts noted that Kraft took months to agree a $9.2 billion loan for its Cadbury bid, while Ferrero-Hershey would have to fund the bid with debt rather than equity, as Ferrero is privately owned, and Hershey controlled by a charitable trust.

It's not impossible, but we would be sceptical, said analyst Alex Molloy at brokers Credit Suisse.

Investors also expressed doubts.

It's a very long shot, and we would be very surprised if they got involved, said one top 10 Cadbury investor speaking on the condition of anonymity.

For a graphic comparing Cadbury, Kraft and Hershey, click: http://graphics.thomsonreuters.com/119/EZ_CDKFHS1109.gif

Hershey is much smaller than Cadbury, has high debt and control by the trust raises complications, while the secretive Ferrero has made few acquisitions.

The Hershey Trust needs to ensure that it can meet its charitable purposes and protect its long-term income... It will probably act conservatively and won't want to see Hershey overpay and take on a lot of leverage for an acquisition, said a lawyer at a top ten London law firm.

Traders speculated that a break-up of Cadbury was a likely scenario if Hershey and Ferrero pressed ahead.

Ferrero would want Cadbury's European chocolate business, while Hershey could take the international operations, one trader said, adding that the fact that the two groups may need to team up for their bid was another complication.

Consortium bids are complicated to put together and risky, especially if other investors come in with Hershey and Ferrero as has been suggested, the trader said.

Cadbury shares rose back above 800 pence for the first time in almost a month to a high of 802-1/2p before last trading up 1.5 percent at 799p by 1408 GMT, while Kraft's cash and share bid currently values them at 726p, or 10 billion pounds.

JP Morgan is advising Hershey and is likely to provide financing to support its client, while Rothschild is advising Ferrero, according to sources close to the situation.

Late on Tuesday, a source said Hershey and Ferrero, famed for its Nutella chocolate spread and Ferrero Rocher chocolates, were discussing a bid to fend off Kraft's hostile bid, but talks were very preliminary, very early in the process.

Kraft first disclosed its cash and shares offer for Cadbury in early September, and the rebuffed U.S. group turned hostile with its bid on November 9, which Cadbury again rejected, describing the bid as derisory.

The initial September offer was valued at 745p a Cadbury share, but the fall in Kraft shares and the dollar had knocked the bid value to 717p by the time it turned hostile this month, well below Cadbury's current share price.

Most analysts and investors expect Kraft will have to raise its bid for Cadbury, the world's second-largest confectionery company after Mars-Wrigley, to 800p or above to succeed, and Credit Suisse's Molloy expects them to have to pay 820-830p.

Kraft CEO Irene Rosenfeld has been playing a long game, determined not to overpay for the 185-year-old British maker of Dairy Milk chocolate, Trident gum and Halls cough drops, as most analysts previously said they saw no other viable bidders.

Nestle , the world's biggest food group, has also been named by analysts as a potential partner for Hershey in a rival bid.

Kraft has 28 days, or up to December 7, to publish its official offer document, which will then trigger the 60-day bid timetable under UK takeover rules that would give Ferrero-Hershey until early February to come up with any rival bid for Cadbury.

(Reporting by Paul Hoskins, Rhys Jones and Raji Menon, editing by Will Waterman, Andrew Callus and Sitaraman Shankar)

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