Cadbury’s no to Kraft Food’s $16.7 bn bid

Kraft Foods on Monday proposed a £10.2 billion ($16.7 billion) takeover of Cadbury, but the offer was immediately rejected by the British maker of chocolate, gum and candy.

Updated on: Sep 7, 2009, 22:03:50 IST

Reuters | By Anonymous, London

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Kraft Foods on Monday proposed a £10.2 billion ($16.7 billion) takeover of Cadbury, but the offer was immediately rejected by the British maker of chocolate, gum and candy.

Cadbury said the offer undervalued the company, and expressed confidence in its “standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope.” Kraft was undeterred, however, and said it would continue to seek a transaction which Cadbury's board could support. Cadbury shares shot up 38 per cent on the London Stock Exchange.

Kraft said its proposal valued Cadbury shares at 745 pence — a 31 per cent premium over its closing share price of 568 pence on Friday.

Graham Jones, analyst at Panmure Gordon & Co, recommended that shareholders hold out for at least 800 pence a share. "A key question is whether there is a counter bid,” he said. “However, we see the most likely scenario being Kraft being successful on improved terms."

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