Hostile Kraft bid for Cadbury 'derisory'

A £9.8 billion hostile takeover bid from US food giant Kraft was labelled "derisory" by Dairy Milk maker Cadbury today.



Kraft - the company behind brands including Dairylea and Kenco coffee - appealed directly to Cadbury's investors after its initial approach was rejected by the board in September.

But it refused to improve the terms of its cash-and-shares offer, which is now lower than two months ago due to falls in the Kraft share price.

Cadbury chairman Roger Carr said: "The board has emphatically rejected this derisory offer and has strengthened its resolve to ensure the true value of Cadbury is fully understood by all."

He added: "Kraft's offer does not come remotely close to reflecting the true value of our company."



Kraft disappointed with weak third-quarter results last week - downgrading revenue guidance and hitting its shares. This has sent the value of the firm's offer down from 745p in September to 717p today.

Mr Carr added: "The repetition of a proposal which is now of less value and lower than the current Cadbury share price does not make it any more attractive."

Cadbury will contact shareholders shortly with a defence document setting out why it should remain as a standalone business.

Mr Carr added that a merger with Kraft represented the "unattractive prospect" of being absorbed into the US firm's "low growth conglomerate business model".

Kraft - the world's second biggest food company - dates back to 1903 and its other well-known brands include Oreos biscuits and Toblerone chocolate.

The company was acting before a 5pm "put up or shut up" deadline imposed by the City's Takeover Panel. It now has 28 days to send out its offer document to Cadbury shareholders.

The US firm said: "We believe that our proposal offers the best immediate and long-term value for Cadbury's shareholders and for the company itself compared with any other option currently available, including Cadbury remaining independent."

Kraft believes it makes a "unique fit" with Cadbury and can deliver cost savings of about 625 million US dollars (£373 million) a year through a merger.

Despite hopes of a bidding war involving the likes of rivals such as Hershey and Mars when its interest was first disclosed, Kraft also emphasised it was the only would-be buyer to publicly enter the fray.

Kraft wants a tie-up with Cadbury to create a "global powerhouse" with dominant brands of snacks, confectionery and quick meals.

The firm said a merger would make the new company the number one chocolate and sweets firm and a "strong number two" in chewing gum with the addition of Cadbury's Trident brand.

Kraft has said it will remain "financially disciplined" over its approach for Cadbury. Its largest shareholder is billionaire investor Warren Buffett, who has warned the company against overpaying for Cadbury.

In September it said it hoped to keep open Cadbury's Somerdale facility near Bristol, which is currently scheduled to close, and invest in the firm's Bournville factory near Birmingham.

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 in total more than 250 million are sold every year in 33 countries.



Although the company has 50,000 private shareholders, Cadbury's largest investor is US investment management firm Franklin Resources with just over 8 per cent.

Legal & General, which owns 5.2 per cent of the firm, came out against Kraft's original offer in September, saying it "materially undervalued" Cadbury.

Kraft will have 60 days from the posting of its offer document to win support for its bid unless a competitor forces a battle for control.

News
newsMcKamey Manor says 'there is no escape until the tour is completed'
Voices
Hunted: A stag lies dead on Jura, where David Cameron holidays and has himself stalked deer
voicesThe Scotland I know is becoming a playground for the rich
News
people
Arts and Entertainment
Architect Frank Gehry is regarded by many as the most important architect of the modern era
arts + entsGehry has declared that 98 per cent of modern architecture is "s**t"
PROMOTED VIDEO
Sport
Luis Suarez and Lionel Messi during Barcelona training in August
footballPete Jenson co-ghost wrote Suarez’s autobiography and reveals how desperate he's been to return
Money
Welcome to tinsel town: retailers such as Selfridges will be Santa's little helpers this Christmas, working hard to persuade shoppers to stock up on gifts
news
Arts and Entertainment
Soul singer Sam Smith cleared up at the Mobo awards this week
newsSam Smith’s Mobo triumph is just the latest example of a trend
News
Laurence Easeman and Russell Brand
people
News
ebooksAn unforgettable anthology of contemporary reportage
Sport
Fans of Dulwich Hamlet FC at their ground Champion Hill
footballFans are rejecting the £2,000 season tickets, officious stewarding, and airline-stadium sponsorship
News
Shami Chakrabarti
people
Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites Star Wars 7 rumours
Sport
football
News
news
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

Compensation and Benefits Manager - Brentwood - Circa £60,000

£60000 per annum: Ashdown Group: Compensation and Benefits Manager - Compensat...

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker