Cadbury to face hostile takeover bid

Author: By Russell Lynch, Press Association

Cadbury first rejected a £10.2 billion proposal from the maker of Toblerone,
Oreos biscuits and Dairylea in September.

But Kraft – which has until 5pm tomorrow to table a firm offer or walk away
under takeover rules – is now set to bypass the company’s board and appeal
directly to shareholders.

Kraft disappointed with weak third-quarter results last week, which has
impacted the value of its cash-and shares approach for Cadbury, originally
worth 745p.

Cadbury’s chairman Roger Carr is expected to mount a robust defence of the
firm, according to the Sunday Times, saying that Kraft has turned from a
“low growth conglomerate” to a “no-growth conglomerate”.

Despite speculation of a bidding war for Cadbury when the approach was first
revealed, rival interest from the likes of US giant Hershey has yet to
emerge and consumer goods giant Unilever publicly ruled itself out of the
running last week.

Although Cadbury is said to be looking for a price of at least 850p a share
before even opening discussions, the lack of competition may prompt Kraft to
make only a marginal improvement on its original approach, according to the
Sunday Telegraph.

Kraft’s largest shareholder is billionaire investor Warren Buffett, who has
warned the company against overpaying for Cadbury. Both firms declined to
comment on the reports.

In September, Kraft – whose brands also include Terry’s Chocolate Orange and
Kenco coffee – said a merger with Cadbury would create a “global powerhouse”.

It said it hoped to keep open Cadbury’s Somerdale facility near Bristol, which
is currently scheduled to close, and invest in the firm’s Bournville factory
near Birmingham.

But Cadbury said the approach “fundamentally undervalued” the business and
said that joining Kraft was an “unappealing prospect”.

The firm began life as a grocer’s shop in Birmingham’s fashionable Bull Street
in 1824. Dairy Milk is the UK’s top-selling chocolate bar and in total more
than 250 million are sold every year in 33 countries.

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