Kraft to raise bid for Cadbury, Ferrero mulls bid options: reports

Posted by Daniel Palmer on 4th January 2010

Britain’s Takeover Panel has granted Cadbury three extra days to present new material aimed at fending off the current offer from Kraft as the US manufacturer reportedly considers raising their initial bid.

The takeover saga has rolled on for months, with Kraft, in the absence of competition, seemingly unwilling to raise an offer labelled as “derisory” by the Cadbury Board. However, a lack of Cadbury shareholder support for the current bid is likely to force Kraft’s hand, with a higher offer anticipated in around a fortnight.

Kraft has until January 19 to announce a revised offer or risk losing out on their target if shareholders view the current deal as unacceptable. Cadbury’s Board, meanwhile, continues to insist the offer undervalues their prospects and they have now been granted a three day extension to the deadline for releasing new material information by the Takeover Panel. This will allow them to release their latest trading update.

“The Panel Executive, having received representations from both Cadbury and Kraft Foods, has ruled that, solely in respect of the release of detailed estimated trading results for 2009, this deadline will be extended to 7.00 a.m. on Friday, 15 January,” they advised. “Each of the parties has accepted this ruling.”

Ferrero, meanwhile, has reportedly been in discussions with private equity companies in the past couple of weekes, reigniting the prospect of a bidding battle. The Il Sole 24 Ore daily claimed Ferrero had met with private equity firms Kohlberg Kravis Roberts & Co and Blackstone Group as well as fellow confectioner Hershey to discuss Cadbury. However, the likes of Hershey and Ferrero are still yet to officially throw their hats into the ring and with every passing week it appears increasingly unlikely that a counterbid will be forthcoming.

In late December Ferrero said they were still considering their options and they have refused to be drawn on the latest speculation.

Timeline:

Jan 15: Cadbury to issue trading update
Jan 19: Last day for Kraft to raise their offer
Feb 2: Kraft must convince Cadbury shareholders of the offer’s worth by this date