Cadbury Accepts Kraft’s $19.6 Billion Takeover Bid

U.S. food giant Kraft has bought out UK choclatier Cadbury in a deal worth 11 billion GBP. Many Cadbury workers remained concerned over the longterm future of their jobs. (Matt Cardy/Getty Images)

NEW YORK—British confectionery giant Cadbury PLC accepted a revised hostile takeover offer from U.S.-based Kraft Foods Inc. on Tuesday, after months of wrangling over the purchase price and strong rhetoric from Cadbury that it sought to continue as an independent company.

The deal is valued at 11.9 billion pounds (US$19.6 billion) in cash and stock. The impasse was resolved after Kraft raised the cash portion of the bid this week.

According to Reuters, Cadbury’s board accepted the offer after all-night negotiations at the London headquarters of investment bank Lazard. The merger will create the world’s largest confectionery maker by market share.

The U.K.’s Takeover Panel will give U.S.-based Hershey Foods and Italy-based Ferrero until Jan. 25 to make a rival bid. A source close to Hershey told the Wall Street Journal on Monday that if Cadbury and Kraft reach a deal Hershey is unlikely to offer a rival bid.

The “combination represents a strong and complementary strategic fit, creating a global confectionery leader with a portfolio of more than 40 confectionery brands each with annual sales in excess of USD 100 million,” according to a Kraft statement recommending the final offer.

“We have great respect for Cadbury’s brands, heritage and people,” said Kraft CEO Irene Rosenfeld in a statement. “We believe they will thrive as part of Kraft Foods.”

After weeks of resisting a takeover, Cadbury chairman Roger Carr said on Monday in a statement, “We will now work with the Kraft Foods’ management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees.”

The deal gives Kraft scalability across the world, and leading market positions in some of the world’s largest developing nations such as Brazil, India, and Mexico.

Some employees of Cadbury are disappointed about the news, especially since Cadbury was one of the U.K.’s few remaining large independent enterprises.

“This is the last industry Britain has got. It’s a mistake. A really big mistake, but it’s nothing to do with us—it’s money and greed,” Luke Parker, an employee at Cadbury’s Bournville plant, told the BBC. “At the end of the day, jobs are going to go. All people inside are talking about is selling their shares.”

Carr and Cadbury’s management have long criticized Kraft as a large conglomerate with low growth prospects, and it is unclear what persuaded the board to recommend the offer. However, Kraft’s revised bid of 500 pence (US$8.17) in cash and 0.1874 new Kraft share for each Cadbury share went a long way in pleasing its shareholders.