Kraft launches hostile takeover of Cadbury

Posted Nov 9th 2009 9:50AM by Mark Fightmaster
Filed under: Deals, Kraft Foods'A' (KFT)

Ahead of the pre-determined deadline, Kraft (KFT) decided to launch its formal offer for U.K.-based chocolate maker Cadbury (CBY). KFT announced that the cash-and-stock bid is worth $16.46 billion (9.8 billion pounds) or 717 pence per U.K.-listed CBY share.

At that rate, KFT said the bid is 37% higher than CBY's July 3 close. KFT added that no other potential buyer has declared interest in CBY. KFT is offering CBY shareholders $5 in cash and 0.26 share in KFT. For each American CBY share, KFT is offering $20 cash and 1.04 shares.

This situation has gone hostile, as the initial $16.7-billion bid was rejected by Cadbury back in September. Back then Cadbury has decided that it will not budge from its original stance that it is confident in its "standalone strategy." CBY added that KFT's proposal "fundamentally undervalues the group and its prospects."

KFT is demonstrating that it can be just as stubborn as CBY, noting that it is "convinced of the strategic merits for both companies of combining Kraft Foods and Cadbury." Kraft's CEO Irene Rosenfeld said, "We believe that our proposal offers the best immediate and long-term value for Cadbury's shareholders and for the company itself compared with any other options currently available, including Cadbury remaining independent." So there.

Well, it didn't take long before Cadbury's board rejected the Kraft bid, calling it a "derisory offer" and saying it was worse than the previously rejected offer. It advised shareholders not to accept it.

Tags: Cadbury, CBY, chocolate, hostile takeover, HostileTakeover, inthenews, KFT, Kraft