Cadbury unanimously rejects Kraft takeover bid

Posted by AFN Staff Writers on 15th December 2009

UK confectionery company Cadbury confirmed yesterday that it unanimously rejects the takeover bid by US company Kraft Foods.

On 4 December of this year, Kraft Food attempted to purchase Cadbury, taking the offer directly to shareholders, but the Board unanimously rejected Kraft’s offer as “wholly inadequate” because it “substantially undervalue[d] Cadbury.”

Cadbury has now released a defence document to explain to its shareholders the decision to reject the recent takeover bid from Kraft Foods.

“The Board is committed to maximising shareholder value and believes that this is best achieved
through the strong continuing performance of an independent Cadbury.” the Board said on in an announcement yesterday.

Cadbury Chairman, Roger Carr said “Cadbury is an exceptional business worth much more than the offer put forward by Kraft. It is clear to all that Cadbury is a particularly attractive asset in the sector with iconic brands, a sharp category focus and an enviable geographic footprint.”

“We believe our shareholders should have the opportunity to reap the full rewards of the investment that has already been made in creating a platform for future improved revenue growth, enhanced profitability and high cash returns. Cadbury will have delivered average revenue growth of 6% per annum and improved margins by 350bps for the period 2007-09.* We are committed to the achievement of the higher Vision into Action targets and the creation of significant value – benefits that should fully accrue to our shareholders.”

“Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model. Don’t let Kraft steal your company with its derisory offer.”

Cadbury also said it had upgraded it targets for the next four years including organic revenue growth of 5-7% per year and improved margins of 16-18% by 2013. It also saw double digit growth in its dividends per share from 2010 onwards.

Kraft Foods spokesman, Michael Mitchell, responding to the announcement yesterday, said: “We note the publication today of Cadbury’s formal response to Kraft Foods’ offer. We are reviewing it and will comment in due course. We remain confident that the unique combination of Kraft Foods and Cadbury would create a significant growth opportunity for both businesses and that our offer is in the best interest of both companies’ shareholders.”