By Frank James
It appears a chocolate war has begun.
Kraft, the huge foodmaker based just outside of Chicago, has made a $16 billion unsolicited but initially friendly bid for Cadbury, the British candy company which has rejected it as too low.
Now it appears Kraft may go the not-so-friendly route, with the American company dropping broad hints it could eventually make a hostile offer if Cadbury doesn't go along nicely.
Meanwhile, there are evidently rumblings that Hershey, the huge Pennsylvania-based chocolate maker, could make its own offer for Cadbury's.
An excerpt from The Wall Street Journal:
Kraft -- which owns brands including Oreos and Velveeta cheese -- could face competition for the U.K. company. Hershey Co., the famed Pennsylvania chocolatier, "is likely to make some response," said one person familiar with the matter. Hershey and Cadbury have discussed combinations before. Hershey distributes Cadbury products in the U.S. under a longtime agreement.
Prior to Kraft going public with its offer on Monday, Cadbury had already rebuffed the advance in private. In publicly rejecting it, Cadbury said the offer, a 31% premium to its closing share price on Friday, "fundamentally undervalues" the company...
... A deal between Kraft and Cadbury would create a global food giant with $50 billion in annual revenues, and would boost Kraft's growth prospects by giving it access to new brands, especially in the attractive chewing-gum segment. Cadbury owns the Trident gum brand. Confectionery products typically have higher profit margins than Kraft's companywide operating margin in 2008, which was about 9%.
There's even a chance Nestle SA, the Swiss food company, could make its own offer for Cadbury's.
The WSJ also has a little color about how Kraft CEO dropped the bomb on her Cadbury counterpart, Roger Carr.
Ms. Rosenfeld contacted Cadbury Chairman Roger Carr about 10 days ago, saying she was in the country and would like a meeting, a person familiar with the matter said. The two met at Mr. Carr's office in London on Aug. 28, where Ms. Rosenfeld quickly sprang her offer, people familiar with the matter said. Though Mr. Carr was cool to it, Ms. Rosenfeld followed up the same day with a letter detailing the bid. Cadbury's board, after analyzing and discussing the offer, formally rejected it in a terse letter a few days later, one of the people said.
A Kraft fact sheet that shows the company's current brands. The company owns some of the U.S.'s best known food brands, Oreo, Velveeta and Oscar Mayer. It does have the Toblerone brand of chocolate but Cadbury would greatly expand Kraft's chocolate offerings.
All this is making me hungry.