Kraft strengthened as Ferrero pulls out of Cadbury race

LONDON/MILAN: Italy's Ferrero has decided not to bid for Cadbury Plc, further strengthening the case of Kraft Foods in its 10.5 billion pound ($17 billion) takeover bid for the British chocolatier.

A source close to the situation told Reuters that Ferrero would not proceed with a bid. A second source close to Ferrero said the company had ceased talking with Hershey, a potential partner in a rival bid.

Hershey has struggled to assemble a bid for Cadbury and the Ferrero decision cast greater doubt on its ability to make an offer. Hershey officials would not comment on whether it would proceed with an offer. Last week, Swiss food group Nestle ruled itself out of a Cadbury auction.