The likelihood of a competing offer Cadbury receded yesterday (19 January) after Kraft Foods won the backing of the UK confectioner’s board by raising the value of its takeover bid.

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Kraft’s renewed offer values Cadbury at GBP11.5bn (US$18.8bn), or 840 per share, up from the previous bid of GBP10.5bn. Cadbury shareholders will also receive a special dividend of 10 pence per share.


The higher offer, which represents 13 times Cadbury’s 2009 EBITDA, was enough to win the unanimous support of Cadbury’s board and, according to Bernstein analysts, the increased bid reduces the chances that a counter offer will emerge from Hershey, Ferrero or another third party.


US chocolate maker Hershey and Italian confectioner Ferrero both issued statements confirming that they are studying a possible move for Cadbury at the end of November.


The UK’s Takeover Panel yesterday (19 January) ruled that the potential suitors must “clarify those statements” by either announcing a firm intention to make an offer, or walking away from such a move, by Monday.

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However, according to Bernstein analyst Andrew Wood, Kraft’s bid is now high enough to counter a potential bid from either party.


“We believe that this bid is high enough to deter a counter bid from Hershey and or Ferrero and or another third party,” he said.


“Ferrero seems to have ruled itself out of the process in the past two weeks, although it has still not formally communicated this fact to the UK Takeover Panel. Hershey has continued to work on a deal, and there is still a possibility that it comes back with a higher offer than Kraft’s (plus the break fee), but we suspect that this is unlikely.”