By Simon Kennedy, MarketWatch
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LONDON (MarketWatch) — Cadbury said Tuesday that its 2009 performance was “well ahead” of market expectations as the U.K. chocolate maker reiterated its rejection of a 10.5 billion pound ($16.9 billion) takeover bid from Kraft Foods.
The company said revenue rose around 11% in 2009 and would have been up 5% excluding the impact of currency fluctuations. The trading margin also improved by 1.55 percentage points to 13.5%, with its performance helped by a strong fourth quarter and the contribution from its restructuring program.
Cadbury’s Roger Carr said the performance meant Kraft’s offer is “even more unattractive today than it was when Kraft made its formal offer in December.”
“Don’t let Kraft steal your company with its derisory offer,” Carr said in a message to shareholders.
Low multiple
In its second defense document against the bid, Cadbury said the offer is worth around 12 times its 2009 earnings before interest, taxes, depreciation and amortization. That is lower than any comparable transaction in the sector, the group added.
The company also noted that the shares of its peers have risen around 12% since the offer was made as markets have recovered.
Kraft’s bid is worth 300 pence plus 0.2589 Kraft shares for every Cadbury share, which valued the offer at 763 pence a share, or 10.5 billion pounds at Monday’s closing prices.
Cadbury shares dipped 0.3% to 779 pence Tuesday.
Cadbury, which has already lifted its medium-term growth forecasts as part of its defense against the bid, is targeting sales growth of 5% to 7% over the next four years and a margin of 16% to 18% by 2013.
The group said Tuesday that the full-year dividend is expected to grow by 10% to around 18 pence a share. Cadbury will announce further details on its 2009 performance later in the week.
Door still open
Cadbury’s latest defense came shortly after Warren Buffett’s Berkshire Hathaway (BRK.A 99,999, -301.00, -0.30%) (BRK.B 3,325, +2.99, +0.09%) said it planned to vote against a proposal to fund the deal by issuing millions of new shares.
Buffett’s investment vehicle, which controls around 9.4% of Kraft’s stock, said it was worried about the fall in Kraft’s share price and wouldn’t give the company a blank check to pay for the deal. See story on Warren Buffett’s concerns.
Cadbury’s Carr said on a conference call Tuesday that Buffett “is clearly getting an iron grip on the Kraft management,” but that the U.S. billionaire’s statement didn’t change Cadbury’s position at all.
Separately Tuesday, Italy’s Il Messaggero newspaper reported that UniCredit and Mediobanca are ready to provide a loan to Italian chocolate maker Ferrero to fund a possible joint bid with Hershey Co. (HSY 36.18, -0.20, -0.55%) .
Both companies have previously said they might be interested in bidding for Cadbury and are seen as the only potential rival to Kraft after Switzerland’s Nestle (CH:NESN 48.90, -0.30, -0.61%) said it wouldn’t make an offer.
“We have made it clear that this is an open door for people that can make sensible offers,” Carr said on the conference call.
Simon Kennedy is the City correspondent for MarketWatch in London.
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