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UK regulator sets 9 November deadline for Kraft's Cadbury bid news
30 September 2009

The UK mergers and acquisitions regulator has given US food giant Kraft a six-week deadline to submit a formal offer for Cadbury or abandon the deal for six months.

Britain's Panel on Takeovers and Mergers today said that Kraft has until 9 November to make a formal offer for UK confectioner Cadbury or end its interest for six months.

The Panel said in a statement, ''Following discussions with both parties' advisers, the Panel Executive has ruled that, unless the Panel Executive consents otherwise, Kraft Foods must, by 5:00 pm on 9 November 2009, either announce a firm intention to make an offer for Cadbury under Rule 2.5 of the Code or announce that it does not intend to make an offer for Cadbury.''

It added, ''In the event that Kraft Foods announces that it does not intend to make an offer for Cadbury, Kraft Foods and any person(s) acting in concert with it will, except with the consent of the Panel Executive, be bound by the restrictions contained in Rule 2.8 of the Code for six months from the date of such announcement.''

Cadbury approached the Takeover Panel on 21 September to force rival Kraft Foods, to a "put up or shut up" bid deadline on its August $16.7-billion unsolicited takeover offer. (See: Cadbury tells Kraft to ''put up or shut up'')

Cadbury, responded to the Takeover Panel ruling saying that it has not changed its view that Cadbury would be far better off as a stand-alone company.

"Cadbury has a strong position in the global confectionery market and the board is confident in Cadbury's stand-alone pure play strategy and growth prospects," said Cadbury chairman Roger Carr, in a statement.

"We have made our position on Kraft's proposal very clear and we welcome the panel's decision today in the interests of obtaining clarity and certainty for our shareholders and employees at the earliest opportunity," he added.

In a bid to mount pressure on the UK company, at 7:00 am on 7 September, a Monday morning, Kraft Foods, the largest food and beverage company in the US and the second largest in the world after Nestlé, revealed that Cadbury had rejected its $16.7-billion (£10.2 billion) offer to create ''a global powerhouse in snacks, confectionery and quick meals.'' (See: Cadbury rejects Kraft Foods' $16.7 billion merger offer)

Kraft's unsolicited offer for Cadbury was a cash-and-stock bid, worth $16.7 billion, or 745 pence per share. But since then, Kraft shares has fallen and a weak dollar has lowered that sum to about 709 pence.

But even three weeks after making an informal offer, Kraft has not made a hostile bid, although the UK media has been saying this week that the Northfield, Illinois-based Kraft is preparing to launch a bid significantly higher than the $16.7-billion it already offered in August.

If Kraft makes a higher bid, then it will be going against the advice given by Warren Buffett, Kraft's single largest shareholder, of not overbidding for Cadbury, since according to him, the American food giant's bid of $16.7 billion is a ''pretty full price.'' (See: Warren Buffett warns Kraft not to overbid for Cadbury)

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UK regulator sets 9 November deadline for Kraft's Cadbury bid