{"id":173638,"date":"2010-01-13T01:49:00","date_gmt":"2010-01-13T06:49:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-2183536898019071048"},"modified":"2010-01-13T03:05:38","modified_gmt":"2010-01-13T08:05:38","slug":"telegraph-battle-for-cadbury-comes-down-to-three-numbers","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/173638","title":{"rendered":"TELEGRAPH: Battle for Cadbury comes down to three numbers"},"content":{"rendered":"

In the \u00a310.5bn bid battle for Cadbury, its chairman Roger Carr has never once been behind his tormentor, Irene Rosenfeld, chairman and chief executive of Kraft. <\/span><\/p>\n

By Damian Reece, Head of Business
Published: 6:00AM GMT 13 Jan 2010<\/p>\n

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He took another stride up the hill yesterday to consolidate the high ground with a second defence document that was able to highlight Cadbury’s own trading as reasons to stay in the stock, rather than simply resort to knocking Kraft’s offer. There was plenty of knocking copy but it wasn’t the main focus. In fact most of the negative spin came from Kraft, upset at what it saw as Cadbury playing fast and loose with the numbers. <\/p>\n

One moan was Cadbury’s use of its 2009 figures to compare the value of Kraft’s offer, rather than 2008, which puts the deal in a less favourable light. Given the 2009 figures are now out and are historic, rather than prospective, that looks okay to me.<\/p>\n

<\/p>\n

Kraft was also cross that there was no profit forecast for the first three months of 2010. There is one but Cadbury can’t publish it because no accountant will verify it based on just 12 days of trading, which seems a reasonable defence. Kraft reckons it’s because Cadbury has been deliberately over-trading in the Christmas period, stuffing the retail channel with stock which will be hanging around until Easter, obviously hitting 2010’s first three months’ trading.Cadbury dismisses this and keeps promising “good teen margins” by 2011, which is what shareholders want to hear. <\/p>\n

Looking through the Cadbury statement there simply doesn’t seem to be a good reason to sell the company, and Kraft certainly hasn’t been able to come up with one yet. A 10pc rise in Cadbury’s dividend for 2009 summed up the company’s confidence yesterday, with numbers meeting, or beating, the market’s expectations. <\/p>\n

It’s possible that Cadbury has peaked but why would Kraft want to buy it if so? It’s obvious Kraft thinks Cadbury has bags of potential but why share it? At least, why share it at the current price being offered by Kraft? <\/p>\n

That’s the problem with Rosenfeld’s story. It’s not that it lacks logic for her shareholders but it lacks logic for Cadbury’s. <\/p>\n

It’s obvious why Cadbury would be a good buy for Rosenfeld but anyone occupying the same lofty position as Carr can easily see her coming. That leaves price. <\/p>\n

Plenty of experts are predicting a higher offer and on that score Rosenfeld should remember three numbers. At 800p and below Carr wins. At 825p it’s more difficult for Carr to defend but with only 20pc of Cadbury shares in the hands of arbitrageurs wanting a quick exit, it’s definitely worth Carr fighting to the death, leaving the outcome uncertain. At 850p she wins, with a blessing from Carr, leaving Rosenfeld the simple task of persuading Warren Buffet, her largest shareholder, of what a great deal he’s got.<\/p>\n

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