Cadbury looks set to fall to Kraft after company increases bid
BIRMINGHAM chocolate maker Cadbury today looked set to fall into the clutches of US food giant Kraft in a dramatic twist after the Americans increased their takeover bid to £11.7 billion.
Kraft today confirmed that the two companies were “finalising the terms” of a recommended takeover of the Bournville company, despite months of defiance from Cadbury.
The UK board was reportedly set to recommend that Cadbury shareholders accept the new deal – despite fears that a Kraft takeover would plunge 30,000 jobs into jeopardy.
Kraft, whose brand roster includes Dairylea and Oreos, had until midnight to raise its bid for Cadbury – which currently stands at around £10.5 billion.
The US food giant’s new deal is reported to be worth between 840 and 850 pence per share, and at 850p would value Cadbury at £11.7 billion.
Leading investors in the UK business have so far snubbed the current bid, which Cadbury’s board has labelled “derisory.”
Shareholders will still have to approve the deal , but it is highly unusual for a company to reject a takeover once a recommendation for acceptance has been made.
The twist in the long-running saga will anger unions and other campaigners who have fought the Kraft bid for nearly six months.
Standard Life has put a price of at least £9 a share on Cadbury - which would value the firm at well over £12 billion - while Legal & General has also publicly called for a better offer.
Kraft has so far increased the cash portion of its offer without raising the overall bid, and is under pressure not to over-pay from its biggest shareholder, billionaire Warren Buffett.
News of its interest in Cadbury first emerged in September last year - although speculation of a counter-bid from US rival Hershey is mounting.
Hershey, which already has a relationship with Cadbury making Dairy Milk bars and Creme Eggs under licence in the US, is said to have decided that it can mount a bid without losing its investment-grade credit rating.
Meanwhile, Cadbury has pulled out all the stops in its bid to convince shareholders that the firm should stay independent.
The confectioner has launched a bullish defence of its position by producing trading figures on an “outstanding” 2009, promising sales growth of up to 7 per cent during 2010 and a 10 per cent hike in the dividend this year.
