This article posted on January 4, 2010 at 11:30 am
US food giant Kraft is set to up its £10billion hostile takeover bid for Birmingham-based Cadbury in the next two weeks, it emerged today.
The sweetened offer will be the last effort to entice the Dairy Milk-maker’s shareholders into backing a takeover, according to reports. Kraft’s current offer lapses tomorrow.
But it will almost certainly be rejected because it is more than 60p below Cadbury’s current share price, which values the Bournville business in Birmingham at £10.9 billion.
Cadbury chairman Roger Carr last month accused Kraft of trying to buy the Creme Egg maker “on the cheap”, and warned shareholders not to let the US firm “steal your company with its derisory offer”.
The US firm – behind the Toblerone bars and Terry’s chocolate orange brands – will have to raise its offer by January 19 unless a rival bidder enters the fray.
Fellow US confectioner Hershey and Italian chocolate company Ferrero are both considering their options over Cadbury, although they have yet to make a formal approach.
Cadbury, which employs around 2,500 in the West Midlands, has emphasised its credentials as a stand-alone business by lifting long-term performance targets and producing better-than-expected profit margins for the current year.
Kraft – labelled a “low-growth conglomerate” by Cadbury – has meanwhile been warned not to overpay for the company by its biggest investor, billionaire Warren Buffet.
Kraft is likely to wait until Cadbury’s trading update due on January 15 before making a final decision on whether to raise its offer. It could also increase the cash portion of its bid to make a deal more attractive to Cadbury shareholders.
Although nearly half of Cadbury’s shareholders are based in the US.
Cadbury will release its final defence arguments on January 12.
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