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US Food Giant Kraft Takes Over Cadbury

Cadbury succumbed to the superior might of American food giant Kraft and accepted a takeover bid. The deal brings an end to the drama which began last summer when Britain's last major confectionery group sought
PTI January 19, 2010 11:37 IST
PTI

Cadbury succumbed to the superior might of American food giant Kraft and accepted a takeover bid. The deal brings an end to the drama which began last summer when Britain's last major confectionery group sought to hold off the U.S. predator by playing the heritage card, reports The Mail.

As a result of the deal, which will be formally announced when the London Stock Exchange opens on Tuesday, yet another major UK manufacturer falls into overseas hands.

Under the terms of the deal which were hammered out late Monday night, Kraft will raise its 769p-a-share bid to 840p and offer an extra 10p-a-share dividend. This will take the total amount to the crucial 850p-a-share bar set by Cadbury chairman Roger Carr.

During a day of fraught negotiations, the weeks of acrimony gave way to friendly negotiations in which Kraft, led by chairman Irene Rosenfeld, initially offered Carr 820p-a-share. But he resolutely refused this offer, holding out for 850p. After a lot of haggling, Rosenfeld accepted that she was going to have to pay the full equity and cash amount requested by Carr.

The enhanced part of the deal - the equivalent of 81p-a-share more than Kraft had originally offered - will be paid entirely in cash raising this element of the bid beyond 50 per cent. This will be important for shareholders, many of who are not keen to hold Kraft stock. By allowing Rosenfeld to offer 840p with a 10p dividend, Carr granted her an important key fig leaf.

She will be able to tell her shareholders the headline figure was 840p and that she will allow Cadbury to pay its shareholders the 10p dividend.

Rosenfeld is expected to offer assurances over jobs after being ‘spooked' by comments made by business secretary Peter Mandleson last month. 

He had said to Kraft: ‘If you think that you can come here and make a fast buck, you will find that you face huge opposition from the local population... and from the British Government.'

Rosenfeld will talk about Cadbury's heritage as a Quaker firm and give assurances over both plants and jobs. The enhanced offer will be seen as a good result for Cadbury chairman Roger Carr, and chief executive Todd Stitzer. Both have held firm against the low ball offer from the American conglomerate in a game of brinkmanship.

Cadbury's shares jumped 14p to 807p on Monday  in anticipation of an increased bid. It is unclear where this deal leaves rival Hershey which was attempting to mount its own rival offer for Cadbury.