UK confectioner Cadbury has rejected a GBP10.2bn (US$16.73bn) takeover bid from Kraft Foods, the US food group behind the Milka and Toblerone brands.
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Kraft announced its cash-and-share offer for Cadbury this morning (7 September) and said the deal would create “a global powerhouse in snacks, confectionery and quick meals with a rich portfolio of iconic brands”.
The transaction – worth 300p in cash and 0.2589 in new Kraft shares per Cadbury share – would create a company generating GBP50bn in sales, an “exceptional portfolio of leading brands” and with “significant scale in key developing markets”.
Kraft said Cadbury’s board had rejected the offer despite the bid representing a 31% premium on Cadbury’s share price on Friday (4 September).
However, Kraft chairman and CEO Irene Rosenfeld said the US group would be able to build on Cadbury’s recent moves, through its Vision in Action (VIA) programme, to drive efficiency throughout the business and boost margins.
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By GlobalDataRosenfeld also argued that Kraft would be able to allow Cadbury’s Somerdale production facility, which is set to close, to remain open.
“We believe that Cadbury’s share price already reflects its prospects as a standalone entity and the benefits of VIA. Our proposal therefore not only takes into account these factors, but also provides a compelling premium and, we believe, significantly more value for Cadbury shareholders than Cadbury could create independently,” she said.
“Our current plans contemplate that the UK would be a net beneficiary in terms of jobs. For example, we believe we would be in a position to continue to operate the Somerdale facility, which is currently planned to be closed, and to invest in Bournville, thereby preserving UK manufacturing jobs. We hope to engage with the Board of Cadbury on a constructive basis with the goal of consummating a recommended transaction.”
