David Prosser: Cadbury's owners make their decision


Outlook Give Roger Carr and Todd Stitzer their due. Cadbury's chairman and chief executive have consistently refused to argue against the Kraft deal on any grounds other than shareholder value. While it must have been tempting to try to wrap Cadbury in the Union Jack, or to wax lyrical over its philanthropic origins, the mantra of Messrs Carr and Stitzer has never varied. From day one they have promised to consider any bid that did not undervalue the business.

So is 840p or so a fair price? Well, much to Cadbury's credit, Kraft has been forced to significantly raise its original offer in order to secure its prize. Not only that, but yesterday's offer included a far greater cash component than the first bid, which means accepting the deal requires shareholders to make a much smaller leap into the unknown of Kraft's future performance. And if, six months ago, you had told shareholders what the value of Cadbury shares would be in the market today, they would have jumped for joy.

The counter-argument is that Kraft is paying much less than what we've seen previously in similar deals – notably the 2008 sale of Wrigley to Mars. And it's less than many hoped for – the initial reaction in the City when Kraft made its interest in Cadbury public last September was that a fair price would be somewhere between £10 and £12. Mr Stitzer himself has said that such a range is broadly where Cadbury might expect to be in 2013, assuming it hits its performance targets.

Even on Monday, shareholders weren't in the mood to settle for a cheap offer. Standard Life said that nothing below £9 was going to do the job. In that context, 840p doesn't look such a good deal.

The difficulty for Cadbury's management, however, is that while their public pronouncements might suggest otherwise, they are not the ultimate arbiters of what constitutes fair value. What seems to have made all the difference is that certain key shareholders – notably Franklin Templeton, the company's biggest investor, but presumably, too, many of the hedge funds that own 25 per cent of the shares – told Cadbury that 830p to 850p would be good enough.

In other words, shareholders decided Cadbury had done enough work on driving a hard bargain and that now was the moment for them to exercise their right to decide the future of the company they own. Had a majority of shareholders wanted management to hold out for a bid of £9 or more, they would have said so.

That's the thing about stock market-listed companies. Cadbury may have its headquarters in Britain, but it stopped being British many years ago. It is an international business with international owners, who are free to do what they wish with their shares.

News
A 1930 image of the Karl Albrecht Spiritousen and Lebensmittel shop, Essen. The shop was opened by Karl and Theo Albrecht’s mother; the brothers later founded Aldi
people
News
exclusivePunk icon Viv Albertine on Sid Vicious, complacent white men, and why free love led to rape
Arts and Entertainment
booksThe best children's books for this summer
Sport
Colombia's James Rodriguez celebrates one of his goals during the FIFA World Cup 2014 round of 16 match between Colombia and Uruguay at the Estadio do Maracana in Rio de Janeiro, Brazil
sportColombian World Cup star completes £63m move to Spain
PROMOTED VIDEO
News
news
News
i100
News
people
Sport
Antoine Griezmann has started two of France’s four games so far
sport
Life and Style
techYahoo Japan launches service to delete your files and email your relatives when you die
Life and Style
Child's play: letting young people roam outdoors directly contradicts the current climate
lifeHow much independence should children have?
Arts and Entertainment
Tycoons' text: Warren Buffett and Bill Gates both cite John Brookes' 'Business Adventures' as their favourite book
booksFind out why America's richest men are reading John Brookes
News
i100
News
ebookA unique anthology of reporting and analysis of a crucial period of history
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Programme Director - Conduct Risk - London

£850 - £950 per day: Orgtel: Programme Director - Conduct Risk - Banking - £85...

Business Analyst (Agile, SDLC, software)

£45000 - £50000 Per Annum + excellent benefits: Clearwater People Solutions Lt...

Finance Manager - Bank - Leeds - £300/day

£250 - £300 per day + competitive: Orgtel: Finance Manager - Accountant - Bank...

Compliance Officer - CF10, CF11, Compliance Oversight, AML, FX

£100000 - £120000 per annum + BONUS + BENEFITS: Harrington Starr: A leading fi...

Day In a Page

Some are reformed drug addicts. Some are single mums. All are on benefits. But now these so-called 'scroungers’ are fighting back

The 'scroungers’ fight back

The welfare claimants battling to alter stereotypes
Amazing video shows Nasa 'flame extinguishment experiment' in action

Fireballs in space

Amazing video shows Nasa's 'flame extinguishment experiment' in action
A Bible for billionaires

A Bible for billionaires

Find out why America's richest men are reading John Brookes
Paranoid parenting is on the rise - and our children are suffering because of it

Paranoid parenting is on the rise

And our children are suffering because of it
For sale: Island where the Magna Carta was sealed

Magna Carta Island goes on sale

Yours for a cool £4m
Phone hacking scandal special report: The slide into crime at the 'News of the World'

The hacker's tale: the slide into crime at the 'News of the World'

Glenn Mulcaire was jailed for six months for intercepting phone messages. James Hanning tells his story in a new book. This is an extract
We flinch, but there are degrees of paedophilia

We flinch, but there are degrees of paedophilia

Child abusers are not all the same, yet the idea of treating them differently in relation to the severity of their crimes has somehow become controversial
The truth about conspiracy theories is that some require considering

The truth about conspiracy theories is that some require considering

For instance, did Isis kill the Israeli teenagers to trigger a war, asks Patrick Cockburn
Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Alistair Carmichael: 'The UK as a whole is greater than the sum of its parts'

Meet the man who doesn't want to go down in history as the country's last Scottish Secretary
Legoland Windsor's master model-makers reveal the tricks of their trade (including how to stop the kids wrecking your Eiffel Tower)

Meet the people who play with Lego for a living

They are the master builders: Lego's crack team of model-makers, who have just glued down the last of 650,000 bricks as they recreate Paris in Windsor. Susie Mesure goes behind the scenes
The 20 best days out for the summer holidays: From Spitfires to summer ferry sailings

20 best days out for the summer holidays

From summer ferry sailings in Tyne and Wear and adventure days at Bear Grylls Survival Academy to Spitfires at the Imperial War Museum Duxford and bog-snorkelling at the World Alternative Games...
Open-air theatres: If all the world is a stage, then everyone gets in on the act

All the wood’s a stage

Open-air productions are the cue for better box-office receipts, new audiences, more interesting artistic challenges – and a picnic
Rand Paul is a Republican with an eye on the world

Rupert Cornwell: A Republican with an eye on the world

Rand Paul is laying out his presidential stall by taking on his party's disastrous record on foreign policy
Self-preservation society: Pickles are moving from the side of your plate to become the star dish

Self-preservation society

Pickles are moving from the side of your plate to become the star dish
Generation gap opens a career sinkhole

Britons live ever longer, but still society persists in glorifying youth

We are living longer but considered 'past it' younger, the reshuffle suggests. There may be trouble ahead, says DJ Taylor