Cadbury turns down Kraft hostile bid

The board of British confectioner Cadbury has swiftly rejected the £9.8 billion ($16.4 billion) hostile bid from US food giant Kraft.

The offer, which was put directly to Cadbury’s shareholders, was described by chairman Roger Carr as “derisory”.

Kraft said it would offer 300p in cash and 0.2589 new Kraft shares for each Cadbury share, the same terms as it proposed two months ago.

In September, Kraft, which is renowned for brands such as Kenco coffee and Oreo biscuits, approached Cadbury with an informal £10.2 billion takeover offer, which Cadbury also rejected.

At the time, Roger Carr described the takeover offer as an “unappealing” and “unattractive prospect”.

Under takeover rules, the US food company had until 1700 GMT today to make a firm offer or abandon the deal altogether. Under the UK’s Takeover Panel rules, Kraft will now be blocked from making another approach for six months.

As shares in the US food giant have fallen in value since the original approach, today‘s bid is now worth less than the original £10.2 billion offer.

In a statement, Roger Carr said: “Kraft’s offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model.”

Kraft chairman, Irene Rosenfeld, responded: “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 option currently available, including Cadbury remaining independent.”

Reports over the weekend suggested that before even opening talks, Cadbury was looking for at least 820p a share.

Since the end of August, shares in Cadbury have increased by around 30%.

Cadbury, which as well as Dairy Milk, owns the Green & Black’s chocolate brand, Halls lozenges, Trident and Dentyne gum brands and liquorice allsorts maker Bassett’s, is said to be looking for a price of at least 850p a share before even entering into discussions.

Dairy Milk is the UK’s top-selling chocolate bar with more than 250 million sold every year in more than 30 countries.

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