What would cause Cadbury rejects derisory Kraft offer?
Cadbury chairman Roger Carr said the board ’emphatically rejected this derisory offer’. Photograph: John Phillips/PA Kraft Foods went hostile in its pursuit of Cadbury today when it launched a formal takeover offer worth £9.8bn that was swiftly rejected as “derisory” by the British company’s board. The American food giant, whose brands range from Toblerone to Philadelphia and Dairy Lea, is offering to pay 300p in cash and 0.2589 Kraft shares for each Cadbury share. These are the same terms as those offered two months ago, disappointing those who had hoped for a better offer. Today’s bid values Cadbury at 717p a share. Kraft’s initial, informal approach in early September valued Cadbury at £10.2bn, or 745p a share. But Kraft’s weak results last week have eroded the value of the stock element of the offer. Cadbury – known for Dairy Milk, Jelly Babies and Bassett’s Allsorts – urged shareholders to resist the US company’s advances. “Kraft’s offer does not come remotely close to reflecting
Cadbury Statement in Response to Announcement by Kraft Foods of a Formal Offer Cadbury plc (‘Cadbury’) notes the announcement of an unsolicited offer by Kraft Foods Inc. (‘Kraft’) of 300p and 0.2589 Kraft shares per Cadbury share, implying a value for each Cadbury share of 717 pence (based on the closing price of USD 26.78 for a Kraft share on 6 November 2009 and an exchange rate of 1.6609 USD / GBP) (the ‘Offer’). The Offer’s cash price per share and exchange ratio are unchanged from Kraft’s announcement of 7 September. However, due to the fall in the Kraft share price since then, the implied value for each Cadbury share is around 4% lower. Therefore, the Offer is worse than the proposal that the Board has previously rejected as fundamentally undervaluing Cadbury and its prospects. Accordingly, the Board recommends shareholders reject the Offer and in due course will be communicating with shareholders to set out in more detail why it believes the Offer falls well short of reflecting t
