Kraft goes hostile with original offer

Without raising its September $16.4 billion offer, Kraft, the largest food and beverage company in the US, yesterday went hostile with its bid to acquire Cadbury, once again drawing an immediate negative response from the London-based confectioner.

Taking offer made on 7 September (See: Cadbury rejects Kraft Foods' $16.7 billion merger offer), which was rejected by the Cadbury board at the outset, Kraft has now gone directly to the UK confectioner's shareholders, offering 300 pence in cash and 0.2589 new Kraft share per Cadbury share, which was once again rejected by Cadbury, the maker of Dairy Milk chocolate.

Kraft made its hostile bid three hours before a deadline under British takeover law that required the Northfield, Illinois-based Kraft to make a formal offer or walk away for six months. (See: UK regulator sets 9 November deadline for Kraft's Cadbury bid)

Although the current value of Kraft's bid is still 25 per cent over Cadbury's share price on 4 September, Kraft's original $16.4-billion offer has been devalued due to a fall i n the value of its shares with the strengthening of the sterling against the dollar in the two months since the offer was unveiled in September.

Cadbury shares were worth 745 pence, when Kraft made its cash-and-shares offer for Cadbury, but due to Kraft's share price sinking and a falling dollar, that offer is now valued at 717 pence.

Cadbury's stock closed at 761 pence yesterday at London Stock Exchange, while Kraft shares fell 25 cents to close at $26.53 at the New York Stock Exchange.