Cadbury rejects £10.2bn bid from Kraft

Dairy Milk maker Cadbury today looked set for a takeover tussle with US food giant Kraft after it rejected a surprise £10.2 billion approach.



Kraft - the firm behind brands including Dairylea, Kenco coffee and Terry's Chocolate Orange - said it was "committed" to a deal and wanted constructive talks with its target.



The group also revealed plans to safeguard jobs should a deal succeed, including saving Cadbury's historic Somerdale plant near Bristol from closure.



Cadbury said Kraft's unsolicited cash-and-shares proposal "fundamentally undervalues the group and its prospects".



But shares in the Dairy Milk maker soared 41% as investors relished the prospect of a higher bid from Kraft or even other suitors entering the fray.



Cadbury, founded by Quaker John Cadbury in 1824, has been touted as a takeover target since spinning off its US drinks business last year.



Analysts today speculated that Kraft may be forced to up its 745p-a-share offer to at least 800p - equivalent to £11 billion - to secure a Cadbury deal.



However, it could face competition from other global food rivals such as Hershey, Nestle and Mars, according to experts.



A takeover of Cadbury would mark the biggest in the UK sweets sector since Nestle bought Rowntree in 1988.



Kraft said it was "eager to build upon Cadbury's iconic brands and strong British heritage".



A deal between Kraft and Cadbury, which is the world's second biggest confectionery firm behind Mars, would create a "global powerhouse" with annual sales of around 50 billion US dollars (£30.5 billion), according to Kraft.



The group also sought to give assurance that a deal between the two would see jobs protected and possibly even created.



Kraft hopes to keep open Cadbury's Somerdale facility near Bristol, which is currently scheduled to close in early 2010, while also investing in the firm's Bournville factory near Birmingham.



It said it wanted to "undo" some of Cadbury's streamlining, although it admitted there may be job losses outside the UK under aims to strip out around 625 million dollars (£381.5 million) in costs a year from the merged groups.



Kraft is the world's second biggest food firm, with brands well-known internationally, including Philadelphia soft cheese, Toblerone, Oreo and Maxwell House.



It has annual sales of 42 billion dollars (£25.6 billion) and 100,000 employees worldwide.



In the UK, Kraft employs around 1,500 staff across its headquarters in Cheltenham, Gloucestershire, a coffee manufacturing plant in Banbury, Oxfordshire and a regional office in Kew, west London.



Irene Rosenfeld, chairman and chief executive of Kraft Foods, said: "We have great respect and admiration for Cadbury, its employees, its leadership and its proud heritage."



She added: "Our current plans contemplate that the UK would be a net beneficiary in terms of jobs."



Trade union Unite gave a cautious welcome to Kraft's comments on UK jobs and said it had requested meetings with both Kraft and Cadbury to discuss implications for staff.



Unions fought hard, but failed to overturn Cadbury's decision to close the Somerdale site in Keynsham near Bristol, while they are also now involved in an ongoing dispute over pay with the sweets firm.



Jennie Formby, national officer for Unite, said: "Recent years have seen a great deal of upheaval for Cadbury workers in this country. They've seen work transfer away from their communities to new plants in Poland, jobs go and now a breaking of a promise on pay.



"It is essential that no-one makes rash promises which give false hope to the workforce, and in particularly to our members under threat of redundancy at the Somerdale plant."



Cadbury also appeared to give Kraft's initial proposal short shrift.



It said: "The board is confident in Cadbury's standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope and the continued successful delivery of its Vision Into Action plan."



While Kraft's proposed offer comes at a 31% premium to Friday's closing price for Cadbury shares, it follows hefty stock market falls amid the financial crisis.



Jeremy Batstone-Carr, analyst at Charles Stanley, described the approach as "opportunistic".



"Kraft will need to up its offer to have any chance of success, perhaps to 800p a share or higher," he said.



"An approach at this level will concentrate the minds of other potentially interested acquirers such as Mars, Nestle and Hershey."



Investec analyst Martin Deboo also said the offer was "short of a knock-out blow".



Cadbury has held up well despite the recession, recently revealing that half-year profits rose 11% to £262 million as the tough economic climate failed to dampen demand for treats and sweets.



While a marked improvement, its figures have not come without cost, with Cadbury hiking prices and cutting staff to save cash.



Cadbury announced plans in 2007 to slash 15% of its factory numbers worldwide, leading to a 15% reduction in its global headcount - equivalent to 7,800 jobs.



It is now also embroiled in a dispute with staff over pay and faces strike action after workers last week backed industrial action over complaints the firm was refusing to honour the final year of a three-year pay deal.

News
people
Arts and Entertainment
Lena Dunham
booksLena Dunham's memoirs - written at the age of 28 - are honest to the point of making you squirm
News
Jacqueline Bisset has claimed that young women today are obsessed with being 'hot', rather than 'charming', 'romantic' or 'beautiful'
people
Arts and Entertainment
A bit rich: Maggie Smith in Downton Abbey
tvDownton Abbey review: It's six months since we last caught up with the Crawley clan
PROMOTED VIDEO
Sport
Frank Lampard and his non-celebration
premier leagueManchester City vs Chelsea match report from the Etihad Stadium
Life and Style
A new app has been launched that enables people to have a cuddle from a stranger
techNew app offers 'PG alternative' to dating services like Tinder
Arts and Entertainment
Jake Quickenden sings his heart out in his second audition
tvX Factor: How did the Jakes - and Charlie Martinez - fare?
Sport
premier league
Arts and Entertainment
'New Tricks' star Dennis Waterman is departing from the show after he completes filming on two more episodes
tvOnly remaining original cast-member to leave crime series
Sport
Mario Balotelli celebrates his first Liverpool goal
premier leagueLiverpool striker expressed his opinion about the 5-3 thriller with Leicester - then this happened
News
ebooksAn unforgettable anthology of contemporary reportage
News
Britain's shadow chancellor Ed Balls (L) challenges reporter Rob Merrick for the ball during the Labour Party versus the media soccer match,
peopleReporter left bleeding after tackle from shadow Chancellor in annual political football match
Arts and Entertainment
Female fans want more explicit male sex in Game of Thrones, George R R Martin says
tvSpoiler warning: Star of George RR Martin's hit series says viewers have 'not seen the last' of him/her
News
i100
News
i100
Sport
Plenty to ponder: Amir Khan has had repeated problems with US immigration because of his Muslim faith and now American television may shun him
boxing
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

Senior BA - Motor and Home Insurance

£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

Market Risk & Control Manager

Up to £100k or £450p/d: Saxton Leigh: My client is a leading commodities tradi...

SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

£320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

Head of Audit

To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

Day In a Page

A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits
Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments