SPONSOR
Ferrero, the Italian maker of Kinder chocolate eggs and Nutella spreads, looks set to rule itself out of the bid battle for Cadbury, strengthening Kraft’s chances of sealing a £10.5 billion-plus takeover.
Ferrero declared in mid-November that it was interested in a possible bid and was believed to be talking with Hershey, the American chocolate maker, about a joint offer.
But the privately owned Italian group has reportedly dropped talks with Hershey and has decided not to bid.
A source close to the situation told Reuters that Ferrero would not be proceeding with a bid. A second source close to Ferrero told the news agency that the company had also broken off talks with Hershey.
On their own neither it nor Hershey have the financial resources to buy the whole company and neither have publicly listed shares to offer as a currency.
Michele Ferrero, the head of the Ferrero family, is said to be have been lukewarm about bidding for Cadbury all along, because he wanted to keep the business independent rather than involve other investors.
It was his sons, Pietro and Giovanni, managing directors of the family business, who were thought to be more eager to do a Cadbury deal.
Ferrero could not be reached for comment this morning.
Last week, the Swiss food group Nestle ruled itself out of bidding for Cadbury, at the same time as it bought Kraft’s frozen pizza business for $3.5 billion.
Yesterday, Cadbury executives poured scorn on Kraft’s £10.5 billlion cash and shares offer, calling it derisory and pointing out that Kraft’s management team, led by the chairman and chief executive Irene Rosenfeld, had consistently over-promised and under-delivered.
In response, Kraft today raised its earnings guidance for 2009 from $1.97 to least $2 a share.
The American company said that its increased guidance “reflects strong operating gains as well as a significant increase in marketing investments versus the prior year”.
Ms Rosenfeld said: “As we complete our turnaround we’re delivering high-quality earnings growth, despite the difficult earnings environment … We’re well positioned to deliver sustainable top-tier performance, with or without Cadbury.”
Kraft has until next Tuesday, January 19, to raise its offer, now worth about 760p per Cadbury share.
Cadbury investors are seeking about 850p and Kraft may inject more cash into its offer to appease its own investors, such as Warren Buffett, who had objected to it issuing too many new shares.
Share Investor Blog – Stockmarket & Business commentary
Share Investor New Zealand Business News– Get more business news
Discuss this topic @ Share Investor Forum – Register free
Share Investor’s Daily Forex Updates
Recommended Amazon Reading
 |
The Snowball: Warren Buffett and the Business of Life by Alice Schroeder Buy new: $13.60 / Used from: $11.94 Usually ships in 24 hours |
 |
The Essays of Warren Buffett: Lessons for Corporate America, Second Edition by Warren E. Buffett Buy new: $26.01 / Used from: $29.93 Usually ships in 24 hours |
