Page last updated at 08:55 GMT, Sunday, 13 September 2009 09:55 UK

Cadbury spurns 'low growth' Kraft

Cadbury's produces some of the UK's best known chocolate bars
Cadbury's produces some of the UK's best known chocolate bars

UK confectioner Cadbury has said would-be suitor Kraft has a "low growth" business model, and that a tie-up between the firms is "unappealing".

Last week Cadbury rejected a £10.2bn approach from Kraft Foods, saying the approach "fundamentally undervalued" the Dairy Milk maker.

Now Cadbury chairman Roger Carr has sent an open letter to Kraft chief executive Irene Rosenfeld.

He said the Kraft proposal was "of uncertain value" for his shareholders.

The letter also says that under Kraft's offer, "Cadbury would be absorbed into Kraft's low growth, conglomerate business model, an unappealing prospect".

Share movement

Mr Carr said that it was in Cadbury's best interests to remain as a stand-alone confectioner.

Kraft's bid is worth 300p in cash and 0.2589 new Kraft shares for each Cadbury share, and originally valued Cadbury at 745p a share or £10.2bn ($17bn).

However, this had dropped to around 707p on Friday due to the weakness in Kraft shares and the dollar.

Cadbury's shares closed on Friday at 775-1/2p. Kraft shares have fallen by about 7% since it made its proposal.

As well as Dairy Milk, Cadbury also owns the Green & Black's chocolate brand and Halls lozenges, Trident and Dentyne gum brands, and liquorice allsorts maker Bassett's. It spun off its drinks division as a separate business last year.

Kraft's brands include Kenco and Maxwell House coffee, Oreo biscuits, Jacobs, Terry's Chocolate Orange and Toblerone as well as cheese products such as Philadelphia and Dairylea.

A Kraft spokesman said the company had no comment to make on Mr Carr's letter.

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