Kraft patiently waiting before offering Cadbury sweetener: report

Posted by Daniel Palmer on 16th November 2009

Kraft Chief Executive Irene Rosenfeld is happy to play the waiting game before launching a late increase to the value of their Cadbury bid, according to news reports.

Analysts believe the current offer has a very limited chance to succeed given the differential between the Cadbury share price and that of the offer. Even the prospect of a share price decline if they do not take up the offer is unlikely to sway the majority of Cadbury shareholders, but an extra bit of cash might go a long way.

And, as the deadline for shareholder support edges closer, the potential for a higher offer to succeed grows as it appears a counterbid will not be forthcoming.

“Irene knows she can get Cadbury, it’s a matter of waiting for expectations to come down. Then she will sweeten the deal with cash to get talks with them,” one banking source with knowledge of the bid situation told Reuters.

“She’s had to play a hard game, with the tricky task of offering enough to get Cadbury to talk while not alienating her shareholders, such as Buffett.”

Hedge funds are expecting a higher deal, with the firm of well-renowned American hedge fund billionaire John Paulson increasing its stake in the confectioner twice last week.