BRITISH chocolate maker Cadbury is finalising terms of an improved 12 billion ($A20.8 billion) takeover bid from US food giant Kraft after a bitter battle.
“The boards of Kraft Foods and Cadbury confirm that they are finalising the terms of a recommended offer for Cadbury. A further announcement will be made shortly,” the companies said yesterday.
Kraft chief executive Irene Rosenfeld increased the first bid after Cadbury rejected it as “derisory” and US chocolate maker Hershey prepared to mount a rival offer.
A purchase by Kraft would create a company with about $US50 billion in annual sales, adding Cadbury’s products to Kraft’s Oreo cookies, Toblerone chocolate and Tang powdered drinks.
British-based Cadbury and Kraft declined further comment last night.
Hershey is unlikely to top Kraft’s offer.
As recently as last week Cadbury called US-based Kraft an “unfocused conglomerate” with businesses in “unappealing categories”.
Ms Rosenfeld faced pressure from her shareholders to get the price right.
Billionaire investor William Ackman last week joined Warren Buffett, Kraft’s biggest shareholder, in saying Kraft risked diminishing the merits of a Cadbury takeover by issuing too much stock to pay for it.
Kraft has informed Mr Buffett of the revised deal with Cadbury, a source said.
Mr Buffett’s Berkshire Hathaway company said on January 5 it may support a Cadbury takeover if it concluded the final offer “does not destroy value for Kraft shareholders”.
Mr Ackman’s Pershing Square Capital Management recently bought a $US950 million stake in Kraft, or 2 per cent of the company.
Mr Ackman said a purchase of Cadbury made “tremendous sense”.
Kraft advanced US46 to $US29.58 on the New York Stock Exchange last Friday, before Monday’s US holiday. Based on that price, the original bid of 300p in cash and 0.2589 Kraft shares was more than 60 per cent stock. The new offer consists of 40 per cent stock and 60 per cent cash.
If Kraft reduces the number of shares it plans to issue to less than 20 per cent of its existing shares outstanding, it no longer needs to have the deal approved by its own shareholders.
Kraft had scheduled a special February 1 investor meeting, but Berkshire Hathaway had already voted its shares against the proposal.
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