Kraft has until 5:00 PM today to make a final offer on Cadbury or walk away for six months.
By Chris Farnell
It is now two months since Kraft Foods made its initial offer for the UK confectioner , at 300 pence a share and 0.2589 Kraft shares for every Cadbury share, offering a total value of 745 pence a share. Since then a war of words has taken place between the two companies, with Cadbury stating that Kraft has “fundamentally undervalued” the company, and that Kraft is a “'low-growth conglomerate”.
The Takeover Panel has ruled that today Kraft must make a firm offer for the company, or announce that it does not intend to make an offer.
THE BID
The last two months have seen much speculation, with some shareholders saying they may accept a bid of 850 pence a share. Irene Rosenfeld, Kraft’s Chief Executive, stated the company will maintain a “disciplined approach” to the buyout. She has said that: “With or without Cadbury, Kraft Foods is well-positioned.”
Either way, Kraft is expected to make a hostile bid directly to the shareholders.
CADBURY “DOES NOT NEED KRAFT”
Cadbury’s board is likely to meet today to weigh Kraft’s offer. Roger Carr, Chairman of the company, may draw attention to Kraft’s poor third-quarter results reported last week. He could also bring up the fact that Kraft has failed to meet analysts’ projections for four of the last five quarters.
The Dairy Milk company has been repeatedly defiant in the face of Kraft’s takeover bid.
“While Kraft might need Cadbury, Cadbury certainly does not need Kraft," a Cadbury spokeswoman said today.
Felicity London, a fourth generation member of Cadbury’s founding family, has also been hostile towards the bid, saying it would put a British symbol of industry and philanthropy into the hands of a company she identified with “plastic cheese on hamburgers.”
AN ACCEPTABLE PRICE
Most shareholders have been reticent about what sort of price they would accept from Kraft. Anne Gudefin of Franklin Resources has said she “has an idea” of an acceptable price but that: “We’ll just wait until we have something on the table. If it comes and if we feel that it’s going to be appropriate, we will comment on it.”
However, many suspect the takeover battle is far from over. One analyst said: "We expect Kraft to formalise its bid today, but few expect a knockout bid and this battle could go on well into 2010.”
Edited by Ian Armitage & Ellie Duncan
Source: http://www.cadbury.com/
http://www.kraftfoodscompany.com/