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These Cadbury products were on display Monday in London.
Posted on Mon, Nov. 09, 2009 10:32 PM
Kraft takes its takeover bid to Cadbury shareholders
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NEW YORK | Kraft Foods has gone hostile in its bid to buy Cadbury but didn’t sweeten its first bid, drawing an immediate rejection from the British candy maker.
Taking the same offer directly to Cadbury shareholders probably means that Kraft is betting no competing bids will emerge for the maker of Dairy Milk and Creme Eggs. The early gambit also leaves the company room to take the bid higher.
Kraft made the offer, worth about $16.4 billion, just hours before a Monday deadline imposed by Britain’s takeover law that required the company to make a formal offer or back off for six months. Kraft now has 28 days to file a prospectus, which will then trigger more deadlines that could last months.
The maker of Oreo cookies, Oscar Mayer meats and Nabisco crackers maintained its offer of 300 pence in cash and 0.2589 new Kraft shares. But the deal’s value fell from its original $16.7 billion because Kraft’s shares have fallen since the first offer was announced in September.
Roger Carr, Cadbury chairman, offered a blunt assessment of the bid: “Kraft’s offer does not come remotely close to reflecting the true value of our company.”
Now it’s up to Cadbury’s shareholders to decide.
Most likely, they’ll hold out for a higher offer, analysts say. Kraft put a maximum value on the deal of $17 billion in regulatory filings Monday, though that could change.
“Kraft probably does need Cadbury more than Cadbury needs Kraft,” wrote Jeremy Batstone-Carr, an analyst with Charles Stanley.
He said Kraft will need to offer up to 850 pence per share, or its equivalent including more cash. Kraft’s offer is worth only 714 pence per share, based on its share price and exchange rates Monday afternoon.
Cadbury shares finished trading up 3 pence to 761 pence on the London Stock Exchange after falling earlier in the day. Kraft shares fell 25 cents to close at $26.53 Monday.
Posted on Mon, Nov. 09, 2009 10:32 PM
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