Cadbury rebuffs “derisory” Kraft offer

Posted by Daniel Palmer on 10th November 2009

Cadbury management has remained steadfast in their belief that the confectioner is worth much more than the value placed on it by Kraft, rejecting a formal offer from the manufacturer last night.

Kraft first made a non-binding offer to the Cadbury Board in September, a bid that was quickly rejected. Yesterday, they made the same offer but this time it represents a binding proposal.

In a statement Cadbury said that because of the relative underperformance of Kraft shares since the bid, the offer was actually 4% lower and consequently they are advising their shareholders to ignore it.

“The repetition of a proposal which is now of less value and lower than the current Cadbury share price does not make it any more attractive,” Roger Carr, Chairman of Cadbury, said. “As a result, the Board has emphatically rejected this derisory offer and has strengthened its resolve to ensure the true value of Cadbury is fully understood by all.”

“Cadbury is an exceptional standalone business. It has strong iconic brands, a sharp category focus and an enviable geographic scope. Our successful financial delivery and strong business model reinforce the Board’s belief in both the strategy and prospects of Cadbury as an independent company.”

Mr Carr added that the offer from Kraft did not come close to the value they place on the business, especially as it would involve “the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model.”

“I am confident Cadbury will deliver significant value – which should accrue wholly to our shareholders.”

The saga is likely to roll on for months, with a lack of other interest from other parties presenting Kraft with the luxury of time.