Cadbury gets set to repel Kraft's 'derisory' takeover bid

Dec 8 2009 by Peter McCusker, The Journal

CADBURY will launch its defence against Kraft's hostile takeover bid on December 14.

The posting of its circular to more than 50,000 shareholders follows the publication of Kraft’s offer document on Friday.

The bid from Kraft – the company behind brands including Toblerone, Dairylea and Kenco coffee – values Cadbury at around 713p a share – equivalent to £10.1bn – although Cadbury’s shares were trading at 794p yesterday. The first deadline for shareholder acceptances is January 5, with the whole process subject to a 60-day timetable under Takeover Panel rules.

Roger Carr, chairman of Cadbury, has dismissed Kraft’s initial bid as “derisory” and not even “remotely close” to the true value of the firm.

Meanwhile, speculation is mounting that US company Hershey is in talks with Swiss food group Nestlé about mounting a joint bid for Cadbury.

City analysts have suggested Nestlé could be interested in buying Cadbury’s gum business, but it may face anti-trust issues.

Hershey and Ferrero have already announced they are considering their options for Cadbury, but have yet to make a move.

In November, it was reported that Hershey had lined up more than £4bn in financing to launch a bid. The company has loans from JP Morgan and Bank of America to fund a £10.3bn offer for Cadbury and spark a full-blown bid battle, reports said.

Italian group Ferrero, which owns Ferrero Rocher, Kinder and Nutella, has also been named as a possible buyer of some Cadbury brands.

The Financial Times has reported that Cadbury will emphasise the value of its brands and its strong potential in emerging markets in its defence document. Markets such as Asia are key to Cadbury’s long-term growth and are one of the company’s attractions for Kraft. Cadbury’s sales growth in Western Europe was weak in the four weeks to November 8, with sales up 0.1%, according to Bernstein Research. The chocolate firm will post a trading update with the document next Monday.

Cadbury began life as a grocer’s shop in Birmingham’s fashionable Bull Street in 1824. Dairy Milk is the UK’s top-selling chocolate bar and more than 250 million are sold every year in 33 countries.