Kraft ready to launch hostile bid for Cadbury

Published on Saturday 7 November 2009 16:37

US FOOD giant Kraft is set to launch a hostile takeover bid for UK rival Cadbury tomorrow when a "put up or shut up" deadline enforced by the Takeover Panel expires.

It is to appeal directly to the shareholders of Britain's best known chocolate brand following Cadbury's rejection of an indicative offer worth 10.2 billion – 745pence a share – only two months ago.

Cadbury's shares closed at 762p on Friday which showed that markets were not expecting a massive extra pay-out from Kraft, led by its determined chief executive, Irene Rosenfeld.

One investment banker, who is not involved in the deal, said: "Cadbury will emphasise the value of its stand-alone plan.

"It will argue that it does not need Kraft and that any such offer undervalues its growth prospects."

Under British takeover rules, Kraft needs to put in a formal bid by close of business on Monday or else walk away for six months. The fact that it is waiting until the last few days shows it believes there are no rival bidders, according to analysts.

Even after posting weaker-than-expected quarterly numbers and cutting its sales forecast, Kraft reiterated this week that it would not overpay for the British group best known for its Dairy Milk chocolate.

Investors had hoped that stronger quarterly results would bolster the proposal, but shares in the maker of Velveeta cheese and Oreo cookies declined on the news.

Kraft is the largest food company in the US and No 2 worldwide to Nestl.