Cadbury hits back at 'derisory' Kraft offer

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The Independent Online

Cadbury today accused Kraft of trying to buy it "on the cheap" as it set out a robust defence against the US suitor's £10 billion hostile bid.

The Dairy Milk maker upped long-term performance targets and said profit margins for the current year were expected to be higher than original guidance, as it sought to underline its prospects as an independent company.

Cadbury chairman Roger Carr warned shareholders not to let Kraft "steal your company with its derisory offer".

The group's defence comes amid reports that Cadbury is in talks with US rival Hershey over a possible "white knight" offer.



Cadbury declined to comment on the reported discussions with Hershey, but confirmed expressions of interest by potential rival bidders.

Hershey has already said it is considering options for Cadbury, as has Ferrero Rocher maker Ferrero.

Cadbury is widely speculated to favour a tie-up with Hershey, with which it already has a business relationship as Hershey holds a licence to make Dairy Milk bars and Cadbury Creme Eggs in the US.

Kraft's approach - worth around 725p a share - is also seen as being far short of the 850p price analysts believe Cadbury can fetch and has been quickly dismissed by the group's board as being "wholly inadequate".

Cadbury shares are currently trading at just under 800p each.

Mr Carr said: "Cadbury is an exceptional business worth much more than the offer put forward by Kraft."

He added: "Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model. Don't let Kraft steal your company with its derisory offer."

Today's increased performance targets will see Cadbury aim for sales growth of 5 per cent to 7 per cent a year for the next four years and improved margins, while also seeking to please investors with double digit growth in shareholder payouts.

Cadbury has already lifted revenue guidance for the current financial year and said recent trading was in line with the upgraded expectations thanks to emerging market growth for chocolate sales and "excellent" performance across its candy range.

It is also hoping to slash its supplier network as part of the plan to deliver better figures.

Investors now have until January 5 to make up their minds on the Kraft bid, with the whole process subject to a 60-day timetable under Takeover Panel rules.

But it may turn into a lengthy takeover battle if other groups that have been circling Cadbury formally enter the fray.

Cadbury began life as a grocer's shop in Birmingham's fashionable Bull Street in 1824. Dairy Milk is the UK's top-selling chocolate bar and more than 250 million are sold every year in 33 countries.



The Unite union said it wanted Cadbury to remain independent and fend off any hostile bids in the interests of the firm's 6,200 workers in the UK and Ireland.

Assistant general secretary Len McCluskey said: "Cadbury's is a stable company and is not for sale. Takeover talk is being driven by speculators.

"If new bidders do emerge, we will seek to raise with them the same concerns we raised with Kraft - What are their investment plans? Will the company stay based in the UK? - and we want commitments in terms of jobs, pensions and pay to stand for at least the next five years.

"We would expect them to be open and disclose these plans; after all, if they know enough about the business to bid for it, they will have a clear idea about how they're going to pay for it.

"The last issue for us is the one of using debt to pay for Cadbury. Inevitably, this destabilises the business and normally spells cuts in jobs and wages, so we will be watching closely to see how bids are to be funded."

Unite will stage a demonstration in Bourneville, Birmingham, tomorrow to protect Cadbury's independence.

The union will unveil a petition as part of its Keep Cadbury Independent campaign and is contacting shareholders urging them to reject Kraft's bid.

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