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Kraft poised to make knockout bid for Cadbury

Robert Peston | 20:05 UK time, Monday, 18 January 2010

Kraft may increase its takeover offer for Cadbury by more than the market expects, to between 840p and 850p per share, I have learned.

At that level, Cadbury's board may recommend the bid by the US food giant.

This would bring to an end the intense animosity between the companies that has been manifested since Kraft announced its desire to own Cadbury last autumn.

It would also end any doubt at all that Cadbury will lose its independence.

There would still be a theoretical possibility that the US confectioner Hershey would come in with a higher offer.

But if Cadbury's board recommends Kraft's bid, it means that the company will be taken over.

Negotiations between Cadbury's bankers and Kraft's bankers are taking place overnight.

If a deal is agreed between Kraft and Cadbury, which seems highly likely, it will probably be announced at 7 tomorrow morning.

Under British takeover rules, an announcement by Kraft of its intentions has to be made by close of business tomorrow.

At 850p, Cadbury would be valued at £11.7bn.

Please see my earlier note for more on the implications of a takeover of Cadbury.

Comments

  • Comment number 1.

    Another example of a US firm taking advantage of a US-induced crisis to mop up foreign assets at knock-down prices?

    Who knows, perhaps Kraft will be extending high interest loans to developing countries next.

    It's time for the UK to stop being the Blair-style lapdog to a failed state and regain some of its former prestige.

  • Comment number 2.

    Just wondering how much of the 850p is ( if correct) funded by Kraft's debt, stock and cash.

  • Comment number 3.

    Great, buy with more debt and goodbye to UK jobs to finance yet more American asset stripping.

    Its 2010 and still we have learnt anything from the woes of 2007 and the years running up to then.

    I also wonder just how much of the monies to pay for all of this will be the result of soft American government financing

  • Comment number 4.

    I will never forgive this lousy, industrially treacherous government of ours if they fail to prevent this takeover.

  • Comment number 5.

    The key is that the two bank groups are talking to each other.
    No doubt working out who will be licking their fingers most.

    The point being that yet again we should be in no doubt that bankers are in control.

  • Comment number 6.

    Ah, but is Cadbury really as healthy as they say they are? I happen to know that at least one of their warehouses has been bursting at the seams since the new year and incoming deliveries have been cancelled in the last fortnight because stock levels are exceeding capacity....and that measures are currently being taken to get retailers to accept deliveries early and/or place orders for delivery within 24-hours....Wonder if Kraft know about that?

  • Comment number 7.

    Why is Cadbury worth so much to Kraft when the existing management have not been able to generate sufficient distributable profit to its present shareholders to make it worth more?

    No convincing answer - except these decisions are mathematical. The bug in all international business is of course the relative value of sterling vis a vie the US dollar (in this case).

    But the fact remains the Kraft obviously see more value in Cadbury than do the present shreholders. If Kraft can generate more value in Cadbury than Cadbury's management can - then the obvious answer is that there are ways of generating extra profits that the Cadbury management are not prepared to engage in. Again, one has to suspect that the Cadbury brands are more profitable when they are manufactured abroad and given Kraft seem to be about to raise their bid Kraft will be forced to avail themselves of every opportunity to maximise the return from their purchase so let me introduce you to the imported flake!

  • Comment number 8.

    #6 Nighthawk117

    Presumably stocking up ready for Easter?

  • Comment number 9.

    #7

    Yes but manufacturing abroad is now so noughties... The trend of the intelligent manufacturer is to repatriate manufacturing and stop transferring our wealth overseas.

  • Comment number 10.

    Unfortunately I've now officially lost hope that Cadbury could keep it's independance.

    A black(er) day for us all; every last one of us.

  • Comment number 11.

    To stop all this nonsense, let's take a leaf out of Billy Bragg's book and take direct action.
    http://www.guardian.co.uk/politics/2010/jan/18/royalbankofscotlandgroup-executive-pay-bonuses

  • Comment number 12.

    #11

    What do you suggest - we just stop buying Cadbury products until Kraft goes away? I've done that.. In fact I'm so darn angry I'm thinking of starting my own chocolate company..

  • Comment number 13.

    I can only hope and pray that you will continue to fight for our decades-long beautiful love affair. I swear if Kraft so much as changes as changes one tiny detail of your recipes, I will never touch a Kraft product again. Not even the mac&cheese as long as I live. I'm going to the store now to stock up on . Sniff*sniff*
    All my love forever,
    Nina, Dallas, Texas

  • Comment number 14.


    the logic behind the so called free market in ownership is that if Kraft are willing to pay more then (a) they can get more value out of the company and (b) the shareholders get more than they currently have. A win-win?

    Perhaps. But perhaps not. Kraft are essentially buying the Cadbury brands and will, most likely recoup the added value by rationalising their European production (they are Kraft Jacob Suchard).

    The UK might, nonetheless, benefit from this "inward investment" if the money received by Cadbury shareholders (how much is atually money?) were re-invested in similarly productive activity. But it won't be: the money (or Kraft shares) will mostly be held by pension companies - and, at best, it will generate slighly more income to pay for our pensions.

    A hidden consequence of an aging population and the pension culture.

  • Comment number 15.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 16.

    #12
    Well Wee-Scamp we are now too late for direct action anyway. Although could still boycott Cadburys products if they were looking to move jobs from the UK, which many people have already pointed out is a likely scenario.
    Anyway the people need to be mobilised to take direct action on issues like these. The General Election would be a good start. Boycott the two main parties or not vote at all. The ruling classes need to be taught a lesson.

  • Comment number 17.

    Having heard the news this moning, more job losses and disapointment. As a family no more purchases of Cadburys chocolate.

  • Comment number 18.

    I would like to know if, and by how much, any Cadbury board member's contract has been changed in the past two weeks. I believe there is a serious conflict of interest, when the people who can make recommendations to shareholders on a sale such as this, are the same people who personally stand to make a great deal of money after negotiating their own future contracts/pension rights or pay offs, with the predator company. I am sure the employees of Cadbury would agree.

  • Comment number 19.

    re the Cadbury takeover, i don't think the chap who maintains the great is being taken out of Britain is a misery guts, he is correct, I probably sepak for myself and the most of Britain, that should Kraft take this over i shall never purchase it again, much the same has happened with Terry's of York, they can't give their chocolate oranges away, since it has moved to Poland. They will regret this action

  • Comment number 20.

    Just another example of the fat cats lining their pockets and to please the sharholders, what about employee loyalty. no more visits to Cadbury world and no more purchases of Cadbury chocolate.

  • Comment number 21.

    There are good arguments that Britain will be better off without Cadbury.
    See here... http://lavatoryreader.typepad.com/the-lavatory-reader/2010/01/good-riddance-to-the-farting-cadburys.html

 

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