Cadbury looks set to be taken over by Kraft Foods after the UK confectioner’s board approved an increased offer from the US food giant this morning (19 January).

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The Dairylea and Toblerone maker had until midnight to raise its bid for Cadbury – which previously stood at around GBP10.5bn (US$17.2bn) and had been repeatedly rebuffed by Cadbury management as “derisory”.


The Cadbury board will now advise its shareholders to accept the renewed offer, which values the company at GBP11.5bn.


Kraft is offering Cadbury shareholders 840 pence per Cadbury share. The offer will consist of 500 pence in cash, with the rest made up of Kraft shares. In addition, Cadbury shareholders will be entitled to receive a special dividend of 10 pence per share.


Kraft is expected to borrow GBP7bn to finance the deal.

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Irene Rosenfeld, chairman and CEO of Kraft, said it has “great respect” for Cadbury’s brands, heritage and people.


“We believe they will thrive as part of Kraft Foods. This recommended offer represents a compelling opportunity for Cadbury shareholders, providing both immediate value certainty and upside potential in the combined company. For Kraft Foods shareholders it transforms the portfolio, accelerates long-term growth and delivers highly attractive returns, while maintaining financial discipline.”


Roger Carr, chairman of Cadbury, said the firm believes the offer represents “good value for Cadbury shareholders”.


“We are pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world. We will now work with the Kraft Foods’ management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees.”


Cadbury shareholders have until 2 February to accept the offer.