Ferrero, Hershey review options over Cadbury

* Ferrero, Hershey say reviewing options over Cadbury

* Source says Ferrero, Hershey mulling joint Cadbury bid

* Talks between the two companies "very preliminary"

* Analysts and investors still see Kraft as front runner

* Cadbury shares top 800p, 1st time since Oct. 21

By David Jones and Victoria Howley

LONDON, Nov 18 (Reuters Life!) - Italy's Ferrero and U.S.-based Hershey are reviewing options over a possible bid for Cadbury, but analysts and investors still see hostile bidder Kraft's $16.2 billion offer as the front runner.

Hershey and family-owned Ferrero both said separately they were evaluating their options, and both said 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 on Wednesday.

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.

Hershey is much smaller than Cadbury, has high debts, and is controlled by a charitable trust, while the secretive Ferrero has made few acquisitions, prompting doubts that the two could mount a successful bid.

Analysts noted that Kraft took months to agree a $9.2 billion loan for its Cadbury bid, while Ferrero-Hershey would have to fund a $16 billion-plus bid with debt rather than equity, as Ferrero is privately owned and Hershey controlled by the 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: here

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 0.9 percent at 795p by 1220 GMT, while Kraft's cash and share bid currently values them at 726p.

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 Nov. 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.

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 Dec. 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 and Andrew Callus)