BRUSSELS (Reuters) – The European Commission said on Wednesday it had given conditional approval for U.S. food group Kraft Foods Inc to take over British confectionery maker Cadbury.
The European Union executive said in a written statement the hostile bid was conditional on Kraft’s divestment of Cadbury’s Polish and Romanian chocolate confectionery businesses.
The combination of Kraft and Cadbury would create the world’s largest sweets, chewing-gum and chocolate group, overtaking Mars-Wrigley.
The Commission took its decision after Kraft, the maker of Dairylea and Oreo cookies, offered concessions last month to ease regulatory concerns that its bid for Cadbury could be anticompetitive.
“In view of the remedies offered, I am satisfied that the proposed takeover would not adversely affect competition anywhere in Europe and that consumers would not be worse off,” Competition Commissioner Neelie Kroes said.
The Commission made clear that while both Kraft and Cadbury were strong global players, Kraft was not so dominant in Britain and Ireland, where Cadbury is the market leader.
Kraft’s cash and shares bid is currently worth 767 pence or 10.5 billion pounds ($16.8 billion) for Cadbury, but under Britain’s takeover rules the U.S. group has until January 19 to raise its bid. Cadbury shareholders have until February 2 to make their choice.
Kraft said it had a 1.52 percent take-up from Cadbury shareholders for its hostile bid. But most shareholders are expected to wait to see if Kraft raises its bid before making their decisions.
Kraft said it had received the acceptances by its first closing date of 1300 GMT on January 5, but its offer remains open until 1300 GMT on February 2.
Kraft’s biggest shareholder, Warren Buffett, warned the U.S. group on Tuesday that he would vote against Kraft’s proposal to issue 370 million new Kraft shares to fund the bid unless he was convinced it did not destroy shareholder value.
Buffett’s intervention and Nestle’s decision on Tuesday not to bid for the British confectionery group pushed Cadbury shares lower and Kraft higher, narrowing the current bid premium to around 0.7 percent, from nearly 10 percent on Monday.
The purchase of Cadbury would help expand Kraft’s business into faster-growing and higher-margin markets such as India.
(Writing by Timothy Heritage, editing by Luke Baker)
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