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Kraft makes Cadbury takeover bid Kraft makes Cadbury takeover bid
(20 minutes later)
US food company Kraft has launched £9.8bn ($16.43bn) hostile bid for UK confectioner Cadbury.US food company Kraft has launched £9.8bn ($16.43bn) hostile bid for UK confectioner Cadbury.
Kraft announced it will offer 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share, the same terms as it proposed in September. Kraft said it would offer 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share, the same terms as it proposed in September.
Because Kraft shares have dropped in value since then, the bid is now worth less than the original £10bn approach. As Kraft shares have dropped in value since then, the bid is now worth less than the original £10bn approach.
Cadbury had rejected the original Kraft offer, saying it "fundamentally undervalued" the company. Cadbury rejected the new offer, saying it did not come "remotely close" to the true value of its business.
Kraft is now taking its offer directly to its shareholders.
Under Takeover Panel rules, Kraft had until 1700 GMT on Monday to make a new offer or walk away for six months.Under Takeover Panel rules, Kraft had until 1700 GMT on Monday to make a new offer or walk away for six months.
'Long-term value''Long-term value'
CADBURY John Cadbury, a Quaker, opened shop in Birmingham in 1824, selling tea, coffee and hot chocolate - as an alternative to alcohol Dairy Milk brand introduced in 1905, with Milk Tray coming 10 years laterMerged with Schweppes drinks business in 1969. Its drinks arm was spun off in 2008Employs about 45,000 people in 60 countries Check Cadbury shares
"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," said Irene Rosenfeld, Kraft chairman."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," said Irene Rosenfeld, Kraft chairman.
Shares in Cadbury, which had been over 1% higher, fell by 0.5% to 754p. Shares in Cadbury, which had been more than 1% higher in Monday morning trade, then fell to stand 0.5% lower on the day at 754p.
Many investors had expected Kraft to increase its offer to tempt the board to back the offer.Many investors had expected Kraft to increase its offer to tempt the board to back the offer.
Weekend reports had said that some Cadbury shareholders thought 820p a share would be a "starting point" for discussions with Kraft.Weekend reports had said that some Cadbury shareholders thought 820p a share would be a "starting point" for discussions with Kraft.
KRAFT FOODS Founded in Illinois as a cheese wholesaler in 1903Bought in 1988 by Philip Morris, which also purchased Nabisco for $19.2bn in 2000 before integrating it into Kraft FoodsMore than 40 of its brands are more than 100 years oldHas 98,000 employees and 168 manufacturing and processing facilities worldwide
Cadbury chairman Roger Carr had previously said in a letter to Kraft chief executive Irene Rosenfeld that "Cadbury would be absorbed into Kraft's low growth, conglomerate business model" and that made the offer an "unappealing prospect".Cadbury chairman Roger Carr had previously said in a letter to Kraft chief executive Irene Rosenfeld that "Cadbury would be absorbed into Kraft's low growth, conglomerate business model" and that made the offer an "unappealing prospect".
Shares in Cadbury have risen about 30% since late August.Shares in Cadbury have risen about 30% since late August.
As well as Dairy Milk, Cadbury also owns the Green & Black's chocolate brand, Halls lozenges, Trident and Dentyne gum brands and liquorice allsorts maker Bassett's.As well as Dairy Milk, Cadbury also owns the Green & Black's chocolate brand, Halls lozenges, Trident and Dentyne gum brands and liquorice allsorts maker Bassett's.
It spun off its drinks division as a separate business last year.It spun off its drinks division as a separate business last year.
Kraft's brands include Kenco and Maxwell House coffee, Oreo biscuits, Jacobs, Terry's Chocolate Orange and Toblerone, as well as cheese products such as Philadelphia and Dairylea.Kraft's brands include Kenco and Maxwell House coffee, Oreo biscuits, Jacobs, Terry's Chocolate Orange and Toblerone, as well as cheese products such as Philadelphia and Dairylea.