{"id":193880,"date":"2010-01-18T09:09:00","date_gmt":"2010-01-18T14:09:00","guid":{"rendered":"tag:blogger.com,1999:blog-3087194156628161158.post-8172107682485057926"},"modified":"2010-01-18T09:16:44","modified_gmt":"2010-01-18T14:16:44","slug":"marketwatch-cadbury-investor-wants-much-bigger-payout","status":"publish","type":"post","link":"https:\/\/mereja.media\/index\/193880","title":{"rendered":"MARKETWATCH: Cadbury investor wants much bigger payout"},"content":{"rendered":"

\"\"<\/a>LONDON (MarketWatch) — One of Cadbury’s top shareholders thinks the U.K. chocolate maker is worth more than $20 billion and wouldn’t back a takeover bid by Kraft Foods along the revised terms that have been reported in recent days. <\/p>\n

Speaking in an interview on BBC radio, David Cumming, Standard Life Investments’ head of U.K. equities, said Cadbury’s management team has done a good job and that Kraft would need to pay a “full price” to get long-term shareholders on its side.<\/p>\n

“The price in the press I noticed at the weekend, talking about 8 pounds to 8.5 pounds — that would not secure support from companies like ourselves,” Cumming said. <\/p>\n

Standard Life said it holds less than 1% of Cadbury shares. The firm is one of the top 20 investors in Cadbury according to figures from FactSet. <\/p>\n

The Sunday Times newspaper over the weekend reported that Kraft is preparing to raise its offer to around 820 pence a share ahead of Tuesday’s bid deadline. <\/p>\n

Its current offer is worth 300 pence in cash and 0.2589 of its own shares for every Cadbury shares. That valued the bid at 7.69 pounds a share, or around 10.6 billion pounds ($17.3 billion), at Friday’s closing Kraft price. <\/p>\n

Shares in Cadbury rose 1.4% on the London Stock Exchange Monday to 8.04 pounds. <\/p>\n

Cumming said he expects Kraft to raise its offer, because it needs Cadbury’s faster-growing chocolate and gum operations, as well as its presence in markets such as South America and Asia. <\/p>\n

“Kraft is currently a very sort of U.S.-centric amalgamation of relatively low growth businesses like processed cheese, instant coffee and the sort of biscuits you get at coffee mornings,” Cumming told the BBC. <\/p>\n

He also said that, even with a bid of around 9 pounds a share, Hershey could still make a counter-offer. <\/p>\n

The Wall Street Journal reported late Friday that Hershey plans to offer at least $17.9 billion for Cadbury this week, after concluding that it has the financial muscle to outbid Kraft. <\/p>\n

Hershey was working on a finance package including a loan of at least $10 billion from banks including J.P. Morgan Case and Bank of America Merrill Lynch, the report said. It was also expected to include $5 billion in new Hershey shares and at least $3 billion from private investors. <\/p>\n

Buffett concerned <\/h3>\n

While Cadbury’s shareholders have been demanding a better price for their stock, Kraft’s biggest investor — billionaire Warren Buffett — has threatened<\/a> to vote against a deal if the company offers too many of its own shares. <\/p>\n

Buffett’s Berkshire Hathaway said earlier this month that it would vote against the proposal to fund the takeover by issuing millions of new Kraft shares. <\/p>\n

Berkshire Hathaway said Kraft stock was a “very expensive currency” to use, though the investment firm added it could change its mind if it concludes the deal doesn’t destroy value. See story on Buffett’s concerns.<\/a> <\/p>\n

The Observer newspaper reported that Kraft is considering sweetening its bid by adding an extra $1 billion in cash, which could lift the value to around 8.20 pounds a share without needing to issue more shares.<\/span> <\/p>\n

Simon Kennedy is the City correspondent for MarketWatch in London.<\/span><\/p>\n


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