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December 14, 2009

UK: Cadbury issues defence against Kraft takeover

Cadbury, the UK confectioner, has this morning (14 December) outlined its case for independence, urging shareholders to reject the advances of hostile suitor Kraft Foods and to stick with a business that has "exceptional growth opportunities".

Cadbury, the UK confectioner, has this morning (14 December) outlined its case for independence, urging shareholders to reject the advances of hostile suitor Kraft Foods and to stick with a business that has “exceptional growth opportunities”.


The Dairy Milk maker has opposed the prospect of a Kraft takeover since the US food giant made its first proposal in September. Last month, Cadbury brushed off Kraft’s formal takeover bid for the business, labelling the offer “derisory”.


This morning, however, was the formal disclosure of Cadbury’s “defence document”, in which it sought to convince investors of the group’s future as an independent company.


Cadbury, which also owns brands including Trident gum and Halls candy, claimed it enjoyed “a strong position as a unique pure-play confectionery business”. The company also insisted “a leading position in emerging markets”.


The company has also lifted targets for sales growth, margins and dividends under its ‘Vision into Action’ programme, which the business launched in 2007 to improve revenues and profits.


Cadbury has targeted revenue growth of 5-7% a year – compared to its earlier forecast of 4-6% – and improved underlying operating margins of 16-18% by 2013.


Cadbury CEO Todd Stitzer (pictured) and CFO Andrew Bonfield said the potential of the company’s business in emerging markets, as well as plans to make procurement and efficiency savings, would be two key factors in meeting those targets.


Chairman Roger Carr said: “Cadbury is an exceptional business worth much more than the offer put forward by Kraft. 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.”


He told shareholders: “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.”

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