The deadline for Kraft Foods to send its offer document to Cadbury shareholders is approaching – and the US food giant is reportedly set to argue that its cash-and-shares offer has the potential to reach 800p a share.
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Kraft has until the end of Monday (7 December) to publish details of its offer and speculation is mounting about how the company will promote its hostile bid to the Dairy Milk maker’s investors.
According to Bloomberg, Kraft may tell Cadbury shareholders that its offer – which is a mixture of cash and shares in the US food group – will be worth 12% more when the Milka chocolate maker’s stock return to their historic average.
The Cadbury board has rejected Kraft’s offer – which valued the UK confectioner’s stock at 717p a share – as “derisory” and analysts have argued that Kraft needs to raise its bid to sway Cadbury’s management. Andrew Wood, an analyst at Sanford Bernstein, has set a share price target at 900p a share.
Due to changes in the value of Kraft’s own shares and the impact of foreign exchange, the US company’s offer is currently worth 714p per Cadbury share.
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By GlobalDataHowever, according to Bloomberg, the 800p figure that Kraft could outline in the offer document is based on an average share-price-to-earnings ratio for the US group over the last five years.
Nevertheless, when contacted by just-food yesterday (3 December), Kraft officials refused to be drawn on the potential contents of the company’s offer document – other than to repeat the Monday deadline.
Meanwhile, The Financial Times has reported that Kraft could publish the offer documents on Friday ahead of Monday’s deadline.
Shares in Cadbury stood at 799p – down 0.12% on the day – at 09:24 GMT this morning.
Kraft remains the only suitor to have made a formal bid for Cadbury. Two weeks ago, Hershey confirmed an interest in Cadbury and said it was mulling a possible bid for the business.
Since then, Hershey has kept its counsel, although the Wall Street Journal last week claimed the company had asked law makers in Pennsylvania to allow the company to potentially bid for Cadbury.
Hershey’s announcement of an interest in Cadbury was followed by an separate statement from Ferrero confirming the Italian confectioner was in the “preliminary stages of evaluating its options” on the UK firm.
