Don't let Kraft 'steal' our company, Cadbury's boss tells shareholders

Expert warns that takeover by the US food firm would be 'disaster'

Cadbury yesterday reiterated its fierce opposition to the £10.5bn hostile bid made by the US food group Kraft, as the Dairy Milk maker unveiled 2009 results ahead of City expectations.

Publishing its second defence document, Cadbury's chairman Roger Carr urged shareholders not to let Kraft "steal" the company and lambasted the lower growth of Kraft's sales and share price over recent years. He claimed that Kraft's underperfomance was partly because of its management, who "consistently promise one thing and deliver something else".

His comments came as Professor Chris Bones, the dean of Henley Business School, told a Parliamentary committee that a Kraft takeover of Cadbury would be a "potential disaster" that would lead to hefty job losses.

Mr Carr said that Kraft's offer was "even more unattractive" than when it made its formal bid in December, given its strong performance in 2009. Its chief executive Todd Stitzer described as "terrible" Kraft's offer of 0.2589 of its own shares and 300p of cash for each Cadbury share.

Cadbury, which also makes Green & Blacks chocolate, pointed out that Kraft is only offering a multiple of 12 times the UK company's 2009 earnings before interest, depreciation, tax and amortisation, which it said was a "very significant discount to comparable confectionery transactions".

Kraft's offer valued the company at 764p in trading yesterday afternoon. But the City believes Kraft will have to raise it price beyond 800p to have any chance of progressing. The American food group has until 19 January to give details of a sweetened bid or to raise its offer, unless any competing offer is submitted.

In its headline figures for 2009, Cadbury posted underlying revenues up by 5 per cent, bolstered by a 6 per cent rise in the second half. The company, which is based in Bournville, Birmingham, also boasted a trading margin of 13.5 per cent, up by 160 basis points at constant currency. Its Vision into Action cost-saving initiative drove the uplift in margins, which means the efficiency programme has delivered 70 per cent of its original target in half the time. Cadbury is due to confirm or revise its 2009 estimates on Thursday afternoon.

Yesterday, Cadbury also unveiled a 10 per cent growth in its full-year dividend. Last month, Cadbury vowed to deliver revenue growth of between 5 and 7 per cent over the next three years and margins of 16 to 18 per cent by 2013.

Kraft has publicly questioned whether Cadbury can hit such targets. Yesterday, a spokesman said: "Cadbury's final defence document is underwhelming. They have said very little that is new and have ducked the issue of their profitability in 2010. We continue to believe that the certainty and upside potential provided by our offer remains the best option for Cadbury's shareholders."

Rival confectionery companies Hershey and Ferrero are also considering a deal for Cadbury. Yesterday, Mr Carr said "nothing had changed" regarding Kraft's offer being the only one on the table, but again hinted it would prefer a tie with one of its confectionery rivals to a deal with Kraft. "They [Hershey and Ferrero] are both pure-play confectionery so that makes them a similar model to us. They both share similar values and are family businesses so that makes them attractive."

Speaking at the parliamentary business, innovation and skills committee, Mr Bones, who spent nearly 10 years as a Cadbury executive, said: "Having worked for one company, and looked very hard at the other, their cultures are so different and their ways of operating so different that this cannot be anything but a potential disaster – whatever price Kraft pays."

Charm offensive: Rosenfeld flies in

Irene Rosenfeld, Kraft's chief executive, launched her company's bid for Cadbury with as much charm as she could muster, calling herself a "heavy, heavy user" of Trident gum and describing eating a Creme Egg as a "one-of-a-kind experience".

But then there was silence. Only now, in what grumbling Cadbury shareholders are calling a "belated charm offensive", is Ms Rosenfeld in London to chew the fat with investors. They want to press her into raising Kraft's bid to something with an eight in front of it; she will listen, set out some of the post-merger financials, and ask Cadbury's shareholders to commiserate that she has Warren Buffett breathing down her neck.

It is unlikely to charm, but then Ms Rosenfeld, and Kraft's advisers at Lazard, know it is money that talks, and their hope has always been that putting an offer on the table will shift the balance of the Cadbury shareholder register away from long-term holders. Erin Swanson, an analyst at Morningstar, says Ms Rosenfeld's reputation was high going into the bid battle. "She has been instrumental in providing renewed life."

At 56, this basketball-playing, rollerblading executive has also got a reputation for getting what she wants – eventually. From her first job as a market research manager, she spent 22 years at the company, but was passed over for the top job on its flotation in 2001. She quit, and went to run Frito-Lay, Pepsi's crisps and snacks division, where a blizzard of new product launches so burnished her credentials she got a second shot at the top job at Kraft two years later. This time she hopes to win first time.

Stephen Foley

Start your day with The Independent, sign up for daily news emails
Ed Miliband and David Cameron are neck and neck in the polls
election 2015Armando Iannucci: on how British politics is broken
Life and Style
Great minds like Einstein don't think alike
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
ebooksA celebration of British elections
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
Chuck Norris pictured in 1996
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
A voter placing a ballot paper in the box at a polling station
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

£20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

Ashdown Group: Marketing Executive - 6 month FTC - Central London

£25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

Ashdown Group: Junior Project Manager (website, web application) - Agile

£215 per day: Ashdown Group: Junior Project Manager (website, web application ...

Guru Careers: Software Engineer / Software Developer

£40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power