NPosted on: Mon, 11 Jan 2010 02:43:49 EST
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LONDON, Jan 11, 2010 U.K. confectioner Cadbury PLC (CBY) Jan. 5 dismissed an altered offer from Kraft Foods Inc. (KFT), after the U.S. food giant offered a greater percentage of cash as part of the GBP10 billion bid.
“Kraft has once again missed the point,” a Cadbury spokesman said. “Despite this tinkering, the Kraft offer remains unchanged and derisory with less than half the consideration in cash.”
Following an agreement Kraft reached to sell its U.S. and Canadian frozen pizza business to Nestle S.A. (NESN.VX), the Swiss consumer giant, for $3.7 billion, Kraft said it is going to give Cadbury shareholders a “partial cash alternative” to its existing offer.
The new bid offers 60 pence per Cadbury share, bringing the cash part of the deal to 360 a share. Kraft did not say how much the stock element of the cash-and-shares bid would reduce by, but insisted that the increased cash element did not represent a “raised offer.” This suggests the stock element of the deal will be cut.
The previous bid is still the only formal one on the table, offering Cadbury shareholders 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share. It is made up of 60% stock and 40% cash.
Since the alternative cash-share mix was offered, the E.U. has cleared Kraft to make a bid, Nestle has dropped out of the running for Cadbury, and Warren Buffett said Berkshire Hathaway Inc. (BRKA, BRKB), his holding company, wouldn’t support the issuance of new Kraft shares to pay for a Cadbury deal.
These developments sent Kraft shares almost 5% higher and Cadbury’s 4% lower, meaning that Cadbury shares slipped to within pennies of Kraft’s offer price.
Kraft’s stock closed up 0.6% at $28.93 Friday, which means its bid for Cadbury is now worth 764 pence a share and values the U.K. company at GBP10.5 billion, or $16.9 billion. Cadbury shares closed up 0.19% at 778 pence.
Hershey Co (HSY) and Italy’s Ferrero SpA are now in talks over a possible deal for Cadbury, and an offer could be announced as early as Jan 23.
(END) Dow Jones Newswires
01-11-10 0243ET
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