Kraft to Increase Cadbury Offer—Report

By Antonio Perez
Antonio Perez
Antonio Perez
January 18, 2010 Updated: January 18, 2010

NEW YORK—The loyalty of Cadbury Plc shareholders will be tested this week, as Kraft Foods Inc. has increased its buyout takeover offer from 771 pence (US$12.56) per share to at least 820 pence (US$13.36) per share, according to unnamed sourced cited by the Sunday Times over the weekend.

Cadbury and Kraft are locked in a takeover battle as the British confectionery maker attempts to resist a hostile takeover by the U.S. based company. Cadbury officials have long insisted that the previous 10.5 billion pound (US$17.3 billion) offer was lower than the value of the company.

Kraft has until Tuesday to sweeten its offer, subject to shareholder approval.

According to the Times, Kraft will announce the offer on Monday—revised to include extra cash for Cadbury investors who don't want Kraft stock—and will have until Feb. 2 to secure approvals from 50 percent of Cadbury shareholders.

“The minimum price for a conversation is 850p (US$13.84),” Robert Talbut of Royal London Asset Management told the Times. “But even then we would look to the current board for their view.” New Jersey-based Franklin Mutual Advisers is currently the largest shareholder of Cadbury, with a 7.7 percent stake, and interestingly, most of the top shareholders of Cadbury are also shareholders of Kraft.

The Times also said that over the weekend Cadbury allowed Kraft to begin discussions with its independent pension trustees.

Pennsylvania-based Hershey Foods Corp. has regained an interest in purchasing Cadbury, Cadbury Chairman Roger Carr said responding to a question during a conference call last week. He did not say when a potential bid may arrive.

If successful, a takeover by Hershey “would catapult them overnight into a world business,” Carr said on the call.