By Andrew Cleary
Jan. 12 (Bloomberg) — Cadbury Plc, the U.K. confectioner fighting a hostile bid from Kraft Foods Inc., urged shareholders to reject the U.S. foodmaker’s “wholly inadequate” offer after posting a surge in 2009 profit.
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Operating profit rose 27 percent to 808 million pounds ($1.3 billion), the Uxbridge, England-based company said in a statement today. Sales rose 11 percent to 6 billion pounds. Analysts anticipated profit of 806 million pounds and revenue of 6 billion pounds, according to estimates compiled by Bloomberg.
The results may encourage shareholders to hold firm for a higher offer, said Jon Cox at Kepler Capital Markets. Kraft’s “derisory” offer values Cadbury at 12 times 2009 earnings before interest, tax, depreciation and amortization, lower than similar transactions, the U.K. company said. The shares of rival companies have risen an average of 12 percent since Kraft made its approach, it said.
“It’s a good, crackerjack set of figures but does it really change anything too much? I’m not so sure,” said Cox in a Bloomberg Television interview today.
WatchJan. 12 (Bloomberg) — Jon Cox, analyst at Kepler Capital Markets, talks about Cadbury Plc’s 2009 sales performance and the hostile bid from Kraft Foods Inc. The U.K. confectioner said sales and profitability rose in 2009 and urged shareholders to reject the U.S. foodmaker’s offer on valuation grounds. Cox speaks with Bloomberg’s Francine Lacqua and Poppy Trowbridge in London.
Cadbury’s shares were unchanged at 781 pence in London today. Kraft’s Kraft’s cash-and-stock offer is currently worth about 763 pence.
The confectioner’s shares briefly fell below the offer price last week after Hershey Co.’s executives and board members were said to be divided about whether to make a bid for Cadbury. Warren Buffett’sBerkshire Hathaway Inc. also said it will vote against Kraft’s plans to issue new shares to fund part of the deal.
Dividend Increase
Cadbury’s full-year dividend rose 10 percent to 18 pence. The company has forecast a “double-digit” increase in annual dividends over the medium term.
The defense document “doesn’t add anything new to the debate in our view,” Nomura International analyst Alex Smith wrote in a note to clients today. “We still see a majority probability of a successful Kraft takeover at a higher price of around 840 pence.”
Similar takeovers in the industry have been done at between 14.3 times earnings and 18.5 times, Cadbury said in the statement. Food industry takeovers have been down at an average multiple of about 16.2 times earnings, according to Sanford C. Bernstein research. Nestle SA last week bought Kraft’s pizza business for 12.5 times earnings.
“Applying any of the comparable multiples would imply a price per share far above Kraft’s offer,” Cadbury Chairman Roger Carr said in the statement. “Kraft’s offer is even more unattractive today than it was when Kraft made its formal offer in December.”
Cadbury’s 2009 operating margin rose 1.6 percentage points to 13.5 percent, wider than the company’s Dec. 14 forecast of “at least” 13.3 percent. Cadbury’s 2009 earnings before interest, tax, depreciation and amortization were 1.02 billion pounds.
The confectioner today forecast 2010 revenue growth within its 5 percent to 7 percent range, driven by the release of new products.
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