January 12, 2010
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Irene Rosenfeld, the chief executive of Kraft, has been dealt an extraordinary snub by two leading shareholders in Cadbury after trying to launch a charm offensive.
Ms Rosenfeld has sought to meet a number of institutional investors in the British confectionery group before next week’s final deadline for Kraft to raise its hostile £10.5 billion takeover bid for Cadbury.
However, it is understood that at least two of the shareholders have told Kraft that they are uninterested in meeting Ms Rosenfeld, arguing that there would be little point in their doing so until she was prepared to contemplate raising Kraft’s offer for Cadbury. The Times has been told that one of these was Deutsche Bank’s asset management division.
A number of other shareholders, including Legal & General and Scottish Widows Investment Partnership, have agreed to take part in the meetings, which have been scheduled for tomorrow and Thursday. But it is understood that they, too, have made clear that they have no intention of accepting Kraft’s offer while it remains pitched at the existing price.
One person familiar with their thinking said last night: “They have said they will see her, but they will be giving her some very forthright opinions.”
Others that have been invited to meet Kraft include Standard Life, AXA and the Universities Superannuation Scheme.
Ms Rosenfeld’s trip to London is significant because it is the first contact that she has sought with Cadbury’s shareholders since Kraft made its takeover bid on September 7 last year. During the takeover battle, Ms Rosenfeld has taken a methodical approach to the bidding process, insisting that Kraft would “maintain a disciplined approach” and arguing that she was certain of Cadbury’s intrinsic value.
Market insiders believe that her offer to meet Cadbury shareholders represents something of a U-turn from this standpoint. Most Cadbury shareholders have made clear that Kraft’s cash-and-shares offer, which last night was worth 757p per Cadbury share, would have to be raised to at least 800p — and possibly to 820p — to be taken seriously. Cadbury shares closed up 3p at 781p.
One shareholder said that they thought that Ms Rosenfeld was meeting shareholders in an early attempt to “test the water” before raising Kraft’s terms in a way acceptable to Cadbury shareholders and Warren Buffett, Kraft’s biggest shareholder. He said last week that he was opposed to the US food conglomerate’s plans to issue new shares to help to finance a takeover on the grounds that it represented a “blank cheque”.
The shareholder said: “They must be trying to ascertain what they can do before going back to check with Buffett [that this will be acceptable to him].”
Another insider claimed that Ms Rosenfeld’s visits had probably always been part of Kraft’s game plan: “Kraft were always planning to send her to London at this stage. The reason she hasn’t spoken to the investors yet is because, until now, she hasn’t had anything to say to them.”
Cadbury will issue its latest defence against Kraft this morning. It has been given a further three days by the Takeover Panel, giving it until Friday in which to unveil its 2009 trading update, which is also expected to form a key plank in its fight to remain independent. Kraft has until Tuesday next week in which to improve the terms of its offer.
Hershey, the American confectionery group, and Ferrero, the Italian chocolatier, have been given until January 23 to come up with a fully financed bid for Cadbury. Italian newspapers reported at the weekend that Ferrero was seeking to raise a $4.5 billion loan to help to fund a possible bid.
Ferrero, whose brands include Ferrero Rocher, Tic-Tac and Nutella, is not expected to make an offer without a partner such as Hershey, which would also struggle to fund an offer on its own.
Ferrero is also thought to have spoken to private equity firms, including Blackstone Group, about its intentions towards Cadbury.
Wrapping up
Roger Carr, Cadbury’s chairman, will launch a volley of anti-Kraft rhetoric today, asking investors why they would want shares in the underperforming US food group (Helen Power writes). Mr Carr is expected to revisit comments about the mixed performance of Kraft’s share price since its IPO nine years ago as he makes a penultimate defence against the US raider. Todd Stitzer, Cadbury’s chief executive, will announce an increased dividend for 2009. Cadbury has brought forward its 2009 full-year results to Thursday, when it will present its final defence in advance of next Tuesday, when Kraft must make its best and final offer.
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