Cadbury rejects $16.7bn Kraft bid
London, September 7, 2009
Britain's Cadbury, the world's second biggest confectionery group, has rejected a $16.7 billion bid approach by Kraft Foods but North America's biggest food group still hopes it can clinch a deal.
Kraft said on Monday it had offered 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share in the hope that it can create a "global powerhouse in snacks, confectionery and quick meals" with combined revenues of about $50 billion.
Cadbury shares jumped 36 percent to 778 pence at the open, helping lift the European food and consumer goods sector, with Anglo-Dutch giant Unilever up 2.6 percent and Nestle, the world's biggest food group, up 0.7 percent.
Based on Kraft's own closing share price of $28.10 on September 4 and a sterling exchange rate of $1.6346, the offer values each Cadbury share at 745 pence and the company as a whole at 10.2 billion pounds ($16.66 billion).
The offer is a 31 percent premium to Cadbury's closing share price of 568 pence on September 4, Kraft said.
Cadbury declined to comment on the statement from Kraft.
Cadbury's board had rejected the proposal, Kraft said in a statement, adding that it was "committed to working toward a recommended transaction and to maintaining a constructive dialogue". The US company said it had published details of its approach in order to "encourage and further that process".
Kraft predicted a takeover would result in "meaningful revenue synergies over time" and said there was an opportunity to save at least $625 million a year in pre-tax costs.
Cadbury, whose brands include Bassett's Liquorice Allsorts and Maynards Wind Gums as well as its trademark chocolate bars, had sales of 5.4 billion pounds ($8.8 billion) last year while revenues at Kraft, which makes Maxwell House, Oreo cookies and Ritz crackers, were $42 billion.
Kraft said it expected any tie-up to boost earnings in the second year following completion and that the company would likely lift its long term revenue growth target to over 5 percent from over 4 percent at present as a result of any deal.-Reuters