- The Washington Times - Monday, January 18, 2010

LONDON — Shareholders in British candy maker Cadbury PLC are looking for a fat increase in the hostile takeover bid by Kraft Foods Inc., as Kraft faces a Tuesday deadline for changes to its bid.

Cadbury shares moved above 800 pence ($13.08) in Monday trading, indicating the market was looking for Kraft to jump to that level or higher. Kraft’s $17.1 billion offer now values the British chocolate and gum company at about 770 pence ($12.59), an offer that Cadbury dismisses as “derisory.”

David Cumming, head of U.K. equities at Cadbury shareholder Standard Life, said Monday that Kraft needs to aim above 900 pence ($14.71) to secure support from long-term shareholders.

Some analysts believe Cadbury could be had for 820 pence ($13.40) or maybe 850 pence ($13.89), but Mr. Cumming said “that would not secure support from companies like ourselves.”

Standard Life holds about 1 percent of Cadbury shares.

If Kraft wants to raise its bid, it has until midnight Tuesday (7 p.m. EST) to do so. The Hershey Co., which reportedly is working on a possible bid, has until Saturday under U.K. takeover rules.

Kraft, the maker of Oreo cookies and Velveeta, already has sweetened its offer with an option for a larger cash payout and a smaller proportion of Kraft shares. Kraft raised extra cash early this month by selling its North America pizza operations, including Tombstone and DiGiorno, for $3.7 billion to Nestle, which then ruled itself out of any bid for Cadbury.

Kraft CEO Irene Rosenfeld was in London last week meeting institutional shareholders seeking to drum up support.

Her campaign drew a rebuff from Legal & General Investment Management, which holds a 5 percent stake. Legal & General said last week that Kraft’s offer fell short of Cadbury’s long-term value.

Peter Langerman, chief executive of Franklin Mutual Advisers, the biggest Cadbury shareholder at about 7 percent, was quoted last week as saying his company had “absolutely no interest in accepting the current Kraft offer.”

Graham Jones and Damian McNeela, analysts at Panmure Gordon, said in a research note on Friday that Cadbury was worth 900 pence ($14.71).

“On Tuesday the war of words stops and Kraft has to put a sensible offer on the table, otherwise Irene Rosenfeld will have to explain to her shareholders just why she sold one of Kraft’s best growth platforms (pizza) in the U.S.,” they wrote.

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