Cadbury rejects £10bn approach from Kraft

British confectionery giant Cadbury has turned down a £10.2 billion takeover offer from Kraft, the US food giant.

Kraft, which is renowned for brands such as Kenco coffee, Oreo biscuits, Terry’s Chocolate Orange, Toblerone and cheese products such as Philadelphia and Dairylea, said the takeover would secure UK jobs, while keeping open Cadbury’s Somerdale factory, which is currently scheduled to close.

Kraft also said the deal would invest in Cadbury’s plant in Bournville, Birmingham.

However, according to Kraft, Cadbury had “unequivocally” rejected the approach. Kraft said Cadbury’s brands were “highly complementary” to its portfolio and “would benefit from Kraft Foods’ global scope and scale and array of proprietary technologies and processes”.

Shares in Cadbury, the maker of Dairy Milk chocolate, surged 36% to 778p this morning following the news of the takeover.

Kraft chairman, Irene Rosenfeld, comments: “As we have done, Cadbury has built wonderful brands by focusing on quality, innovation and marketing, but we believe the next stage in Cadbury’s development will be challenging, given the increased importance of scale in the industry.”

“We are eager to build upon Cadbury’s iconic brands and strong British heritage through increased investment and innovation. We have great respect and admiration for Cadbury, its employees, its leadership and its proud heritage,” added Ms Rosenfeld.

According to the US food group, a combination of the two firms would create a “global powerhouse” in food and confectionery, with annual sales of around US$50 billion (£30.5 billion).

Kraft said that the offer is a 31% premium to Cadbury’s closing share price of 568p last Friday.

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