Kraft Foods shares fell 5.9 per cent in pre-market trade on Tuesday, a day after the giant US food company went public with a $16.7 billion takeover bid for Cadbury, which the British candy maker rejected.
Cadbury, known for its chocolate bars, rejected the cash and stock bid that valued its shares at 745 pence each. Kraft said it was intent on pursuing the deal, and analysts now expect the maker of Oreo cookies and Ritz crackers to raise its bid.
Kraft Chief Executive Irene Rosenfeld told analysts on Tuesday that the company has been “and will continue to be disciplined” in its attempt to acquire Cadbury.
Even though a deal would make strategic sense for Kraft, JP Morgan analyst Terry Bivens said it was typical for Kraft’s shares to fall at first, due to expectations that earnings would be hurt in the near term.
Kraft shares were down $1.66 at $26.44 in premarket trading on Tuesday from their New York Stock Exchange close at $28.10 on Friday.
Cadbury shares were up 2.5 per cent at 802.5 pence in London.