{"id":181794,"date":"2010-01-14T14:06:00","date_gmt":"2010-01-14T19:06:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-2072723305260851435"},"modified":"2010-01-14T14:23:05","modified_gmt":"2010-01-14T19:23:05","slug":"cnn-money-kraft-fails-to-convince-investors-pin-hopes-on-hershey-bid","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/181794","title":{"rendered":"CNN MONEY: Kraft Fails To Convince; Investors Pin Hopes On Hershey Bid"},"content":{"rendered":"

January 14, 2010: 08:27 AM ET<\/p>\n

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LONDON<\/location> -(Dow Jones)- Kraft Foods Inc.<\/orgid> ‘s (KFT) latest attempt to win over investors in Cadbury PLC<\/orgid> (CBY) met with a lukewarm reception and shareholders are instead pinning their hopes on a rival bid from Hershey Co.<\/orgid> (HSY), people familiar with the situation told Dow Jones Newswires Thursday.<\/org><\/org><\/org><\/p>\n

Kraft’s<\/orgid> chief executive Irene Rosenfeld<\/person> has spent the last few days meeting with key investors in London<\/location> as time runs out for the U.S. food giant to increase its GBP10 billion<\/money> bid for the U.K. confectioner.<\/org><\/p>\n

“She said nothing particularly interesting or new,” said an investor who attended one of the meetings.<\/p>\n

“What is clear is that shareholders want between 800 pence and 850 pence and as much cash as possible–no-one wants Kraft<\/orgid> shares,” the investor added.<\/org><\/p>\n

Kraft’s<\/orgid> formal bid–the only one on the table–offers Cadbury shareholders 300 pence in cash and 0.2589 new Kraft<\/orgid> shares for each Cadbury share. It is made up of 60% stock and 40% cash.<\/org><\/org><\/p>\n

Following an agreement to sell its U.S. and Canadian frozen pizza business to Nestle S.A.<\/orgid> (NESN.VX), the Swiss consumer giant, for $3.7 billion<\/money> Jan.5, Kraft<\/orgid> said it was going to give Cadbury shareholders a “partial cash alternative” to its existing offer.<\/org><\/org><\/p>\n

The new proposal, which has yet to be formalized, offers 60 pence per Cadbury share, bringing the cash part of the deal to 360 a share. Kraft<\/orgid> 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.<\/org><\/p>\n

Cadbury dismissed this altered offer which it said “remains derisory” and investors are similarly unimpressed, hoping that U.S.-based Hershey will come in with a higher offer including a larger cash element.<\/p>\n

“My gut feeling is that Kraft<\/orgid> will raise its offer to between 835 pence and 850 pence a share. If Hershey then comes in higher, as it must if it serious about a bid, then Kraft<\/orgid> will have to think hard,” said another investor who was at the meeting.<\/org><\/org><\/p>\n

Rosenfeld gave every indication that Kraft<\/orgid> needs the scale and scope that a takeover of Cadbury would bring, especially the U.K. group’s presence in emerging markets, the investor said. Kraft<\/orgid> could definitely pay 900 pence but won’t unless forced to, he added.<\/org><\/org><\/p>\n

Kraft<\/orgid> has until Jan. 19<\/chron> to raise its bid while any rival bids must be in by Jan. 23<\/chron>.<\/org><\/p>\n

Hershey is continuing to work toward a bid for Cadbury, according to media reports and despite other reports that Italian chocolate maker Ferrero Spa has decided not to participate in a joint offer. A spokesman for Hershey declined to comment.<\/p>\n

“Shares have risen on the possibility of a Hershey bid and we are hoping for more cash as well as a higher bid,” said one investor who had earlier suggested its fund would sell if any bid reached 800 pence..<\/p>\n

Shares in Cadbury at 1230 GMT<\/chron> Thursday were up 0.8% or 7 pence and at 796 pence, having reversed a decline over the last week which saw the E.U. clear Kraft’s<\/orgid> bid, Nestle pull out of the auction and Warren Buffett<\/person>, Kraft’s<\/orgid> biggest shareholder, say his holding company Berkshire Hathaway Inc.<\/orgid> (BRKA, BRKB) wouldn’t support the issuance of new Kraft<\/orgid> stock to pay for a Cadbury acquisition.<\/org><\/org><\/org><\/org><\/p>\n

Kraft’s<\/orgid> stock closed down 1.6% at $29.23<\/money> Wednesday, making its offer for Cadbury worth 764 pence a share and valuing the U.K. company at GBP10.5 billion<\/money>, or $17.1 billion<\/money>.<\/org><\/p>\n

-By Marietta Cauchi<\/person>, Dow Jones Newswires; +44 207 842 9241; marietta.cauchi@ dowjones.com <\/p>\n

  (END) Dow Jones Newswires

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