Money Matters, Simplified.
Kraft gearing to formalize the takeover bid for Cadbury
by Ishita Sood - November 9, 2009 - comments
Kraft hopes to tap Cadbury's confectionary business to gain an access to various international markets
London, November 9-- U.S.’s largest food and beverage company Kraft Foods Inc., is expected to formalize the takeover bid for Britain's Cadbury which is valued at 10.2 billion pounds ($16.7 billion)
"Monday will start the official process. It's just a starting point," said a source, saying that Kraft could increase its offer.
If the merger succeeds, it could be one of the biggest for this year. Both the sides have hired investment banks and law firms to gird for a fight that could last months.
Cadbury's board was expected to meet on Monday to evaluate Kraft's offer.
A Cadbury spokeswoman, however, repeatedly said that the company still had contrasting views on being bought by Kraft.
"While Kraft might need Cadbury, Cadbury certainly does not need Kraft," the spokeswoman said.
Kraft’s bid
The bid made by Kraft Foods clearly shows that it won’t be paying a penny more for the dairy milk maker.
The maker of Oreo cookies also firmly believes that there would be no more bidders who would be increasing the bidding price for Cadbury.
Kraft has priced the share at 745 pence although Cadbury will not accept till it is offered 800 pence a share.
It is unclear whether Kraft plans to maintain the cash-and-shares offer, the one rejected in September or will it raise it. Cadbury had rejected that offer by Kraft saying it did not make any financial or strategic sense.
But Cadbury has definitely put more pressure on Kraft to raise its offer after beating analysts’ expectations and showing stronger than expected quarterly results. Kraft, however, showed disappointing results for the third quarter.
Deal will be a symbol of philanthrophy
Kraft Chairman and Chief Executive Irene Rosenfeld, is expected to meet Roger Carr, Cadbury's chairman, to seal a friendly deal.
By directly going to Cadbury's shareholders, Kraft will hope to get a better price.
If the deal is struck, it would mean the world’s largest confectionary maker joining hands with the second largest food and beverage maker. It would also mean U.S. hands joining with a British icon, a symbol of corporate industry and philanthropy, a fourth-generation member of the founding family said.
Cadbury shares fell Friday to their lowest level since Kraft launched the offer.