Cadbury awaits latest Kraft move

UK confectioner Cadbury will soon find out if it will be the target of a hostile bid by would-be US suitor Kraft Foods.

Under Takeover Panel rules, Kraft has until 1700 GMT on Monday to make a new offer or walk away for six months.

Reports in UK newspapers have suggested Kraft will make a hostile bid directly to shareholders, and Cadbury will resist the approach.

Cadbury in September rejected an approach worth £10.2bn from Kraft.

Cadbury shares rose 1.4% to 765.5 pence as the deadline for an offer approached.

Some commentators, such as Professor David Bailey from Coventry University, are not convinced a deal will actually go through.

"Kraft is a fairly low growth company," he told the BBC

CADBURY

• John Cadbury, a Quaker, opened shop in Birmingham in 1824, selling tea, coffee and hot chocolate - as an alternative to alcohol
• Dairy Milk brand introduced in 1905, with Milk Tray coming 10 years later
• Merged with Schweppes drinks business in 1969. Its drinks arm was spun off in 2008
• Employs about 45,000 people in 60 countries

Check Cadbury shares

Kraft's original approach was worth 745 pence per Cadbury share, though the cash-and-stock offer has since declined in value because of a drop in the value of Kraft's shares.

Kraft's bid was for 300p in cash and 0.2589 new Kraft shares for each Cadbury share, so the offer is worth about 720p now.

But shares in Cadbury have risen about 30% since late August, and are now 758p a share.

Cadbury has said the original Kraft offer "fundamentally undervalued" the firm and that it would prefer to remain independent.

The Sunday Telegraph reported Cadbury chairman Roger Carr has met most of the company's top 50 shareholders in London and New York to persuade them against Kraft's offer.

'Unappealing'

Mr Carr previously said in a letter to Kraft chief executive Irene Rosenfeld "Cadbury would be absorbed into Kraft's low growth, conglomerate business model" and that made the offer an "unappealing prospect".

KRAFT FOODS

• Founded in Illinois as a cheese wholesaler in 1903
• Bought in 1988 by Philip Morris, which also purchased Nabisco for $19.2bn in 2000 before integrating it into Kraft Foods
• More than 40 of its brands are more than 100 years old
• Has 98,000 employees and 168 manufacturing and processing facilities worldwide

The Telegraph reported that 820p a share would be a "starting point" for discussions with Kraft, according to some Cadbury shareholders.

The confectionery maker last month reported higher-than expected sales for the third quarter, raising pressure on Kraft to up its bid.

It also raised its forecast for revenue this year to "around the middle" of its previous guidance of 4-6% growth.

As well as Dairy Milk, Cadbury also owns the Green & Black's chocolate brand, 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.

Billionaire Warren Buffett, one of the world's richest men, has said the Cadbury offer is "pretty full" as it is.

Mr Buffett's investment firm Berkshire Hathaway is the biggest shareholder in Kraft.

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