The Pennsylvania-based company "is likely to make some response" to Kraft's Monday bid, the financial daily said, citing a source close to the matter.
Hershey's potential bid rises from awareness "that Cadbury is the last major confectionery company potentially available," said the person familiar with the situation according to the financial daily.
In comparison to Kraft, Hershey's position in the market is diminutive, its annual turnover of some $5 billion is eight times smaller than the food giant.
However, the Journal noted, Hershey and Cadbury have a long working relationship, having talked about combinations in the past.
The firm also distributes the iconic British confectioner's products in the United States.
On Monday Kraft Foods's $16.7-billion (£10.2-billion) bid was spurned by Cadbury, though Kraft said it hoped the British group would eventually jump on board.
Cadbury's share price however surged on the news and ended the day with a gain of 37.85% at 783 pence.
In January 2007, top Hershey and Cadbury officers sat down to consider forming a "global confectionery powerhouse," though the financial daily said nothing came of the discussions.
Kraft Foods, the world's second biggest food group after Nestle, said it hoped the takeover would increase annual revenues to $50 billion a year.
A tie-up between Kraft and Cadbury would merge leading Kraft brands Oreo biscuits and Maxwell House coffee with Cadbury's Dairy Milk chocolate and Trident chewing gum.
Cadbury's chief executive Todd Stitzer however maintained that the proposal "fundamentally undervalues" the company and its prospects.
Source: AFP
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