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Cadbury fights back in bid battle Cadbury fights back in bid battle
(about 1 hour later)
UK confectioner Cadbury has defended its decision to reject a hostile takeover bid from Kraft Foods.UK confectioner Cadbury has defended its decision to reject a hostile takeover bid from Kraft Foods.
It repeated its claim that Kraft's "derisory" bid was an attempt to "buy Cadbury on the cheap".It repeated its claim that Kraft's "derisory" bid was an attempt to "buy Cadbury on the cheap".
It cited its strong trading record over the last year, together with its "exceptional growth opportunities".It cited its strong trading record over the last year, together with its "exceptional growth opportunities".
The Cadbury board first rejected Kraft's £10bn bid in November, and is in talks with US rival Hershey about an alternative takeover deal.The Cadbury board first rejected Kraft's £10bn bid in November, and is in talks with US rival Hershey about an alternative takeover deal.
'Iconic brands' 'No merit'
In the statement aimed at shareholders, Cadbury chairman Roger Carr stressed the value of the Cadbury brand and products. In a speech to investors, Cadbury chairman Roger Carr said there were simply no benefits for Cadbury in a takeover by Kraft.
Cadbury have come out fighting here James Targett, Consumer Equity Research Send us your comments Cadbury have come out fighting here James Targett, Consumer Equity Research Send us your comments class="" href="http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/shares/3/87086/intraday.stm">See Cadbury's share price
"While Kraft needs Cadbury, Cadbury does not need Kraft," he said.
"There is no strategic, managerial, operational or financial merit in combining with Kraft - indeed we consider the reverse is true."
Shareholders have until 5 January 2010 to respond to Kraft's takeover offer, which Kraft says is in the "best interests" of both companies.
It values Cadbury at 718p per share - below the current share price of 787p per share.
In an earlier statement Mr Carr had urged shareholders to resist Kraft's approach.
"Cadbury is an exceptional business worth much more than the offer put forward by Kraft," he said."Cadbury is an exceptional business worth much more than the offer put forward by Kraft," he said.
"It is clear to all that Cadbury is a particularly attractive asset in the sector with iconic brands, a sharp category focus and an enviable geographic footprint."It is clear to all that Cadbury is a particularly attractive asset in the sector with iconic brands, a sharp category focus and an enviable geographic footprint.
"Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model. Don't let Kraft steal your company with its derisory offer.""Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model. Don't let Kraft steal your company with its derisory offer."
Cadbury owns brands including Wispa, Dairy Milk and Flake as well as Trident Gum and Hall's Sweets.
Shareholders have until 5 January 2010 to respond to the offer, which Kraft says is in the "best interests" of both companies.
The offer values Cadbury at 718p per share - below the current share price of 787p per share.
Hershey move?Hershey move?
Cadbury chief executive Todd Stitzer said Cadbury's performance in recent months was continuing to "exceed expectations", demonstrating that Cadbury's strategy of remaining as a standalone company was working. Cadbury chief executive Todd Stitzer said Cadbury's performance in recent months had continued to "exceed expectations", demonstrating that Cadbury's strategy of remaining as a standalone company was working.
The company also said it expected revenue growth of between 5% and 7% over the coming years, with operating margins of between 16% and 18% by 2013.The company also said it expected revenue growth of between 5% and 7% over the coming years, with operating margins of between 16% and 18% by 2013.
However, Mr Stitzer made no reference to Hershey making a possible bid to rival Kraft's offer.However, Mr Stitzer made no reference to Hershey making a possible bid to rival Kraft's offer.
Hershey, which already makes some Cadbury products under licence in the US, is believed to be interested in tabling a higher offer in a move welcomed by the Cadbury board.Hershey, which already makes some Cadbury products under licence in the US, is believed to be interested in tabling a higher offer in a move welcomed by the Cadbury board.
Commenting on the statement, James Targett, an analyst at Consumer Equity Research, questioned Hershey's ability to buy Cadbury outright, given the relative size of the two companies. James Targett, an analyst at Consumer Equity Research, questioned Hershey's ability to buy Cadbury outright, given the relative size of the two companies.
He added that it was now down to the shareholders to decide who they trusted.He added that it was now down to the shareholders to decide who they trusted.
"Cadbury have come out fighting here. It will come down to whether shareholders have confidence in Cadbury's management's ability to deliver on what they're promising," he said."Cadbury have come out fighting here. It will come down to whether shareholders have confidence in Cadbury's management's ability to deliver on what they're promising," he said.
"Kraft have to prove why Cadbury's won't be able to deliver on those promises as a standalone company." "Kraft have to prove why Cadbury won't be able to deliver on those promises as a standalone company."
Cadbury owns brands including Wispa, Dairy Milk and Flake as well as Trident Gum and Hall's Sweets.