Cadbury has rejected Kraft Foods attempt to get its hands on the British candymakers famous chocolate eggs.
Cadbury has rejected Kraft Foods attempt to get its hands on the British candymakers famous chocolate eggs.
Cadbury PLC, the British candy maker, rejected Kraft Foods Inc.'s hostile $16.3 billion takeover offer on grounds that the offer wasn't rich enough.
Kraft, a U.S. food giant, made an initial bid in September which was greeted with a thanks-but-no-thanks response from Cadbury. The American company followed up with a hostile bid at essentially the same terms as the earlier offer.
But Cadbury has rejected that bid too, saying that since Kraft's stock price has slid following its September offer, Kraft is actually offering Cadbury shareholders less value than before.
A Cadbury statement makes clear, however, that the rejection isn't all about money. Cadbury clearly prefers to remain an independent company.
Furthermore, Cadbury trash talks Kraft, calling itself an "exceptional standalone business" and Kraft a "low growth conglomerate." Ouch.
According to how these events usually play out, the stage is now set for Kraft to go directly to shareholders and explain why its bid represents a extraordinary value for Cadbury's shareholders and why Cadbury's current management is a hindrance to shareholders making serious money and the candymaker exploiting its full potential.
Kraft could raise its offer for Cadbury. Kraft's current offer is in cash and Kraft shares: 300 pence and 0.2589 Kraft shares for each Cadbury share.
Cadbury could always try to find a white knight to save it from Kraft's clutches. Or another company could decide on its own to make a competing bid.
Here's Cadbury's statement:
The Offer's cash price per share and exchange ratio are unchanged from Kraft's announcement of 7 September. However, due to the fall in the Kraft share price since then, the implied value for each Cadbury share is around 4% lower. Therefore, the Offer is worse than the proposal that the Board has previously rejected as fundamentally undervaluing Cadbury and its prospects.
Accordingly, the Board recommends shareholders reject the Offer and in due course will be communicating with shareholders to set out in more detail why it believes the Offer falls well short of reflecting the value of Cadbury.
Roger Carr, Chairman of Cadbury, said: "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. As a result, 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.
"Cadbury is an exceptional standalone business. It has strong iconic brands, a sharp category focus and an enviable geographic scope. Our successful financial delivery and strong business model reinforce the Board's belief in both the strategy and prospects of Cadbury as an independent company.
"Kraft's offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model.
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