Money Markets
Cadbury rejects fresh takeover bid
Cadbury, a British candy maker, rejected a revised hostile takeover bid from Kraft Foods of America. Photo/REUTERS
Cadbury, makers of dairy milk range of chocolate-based products distributed in Kenya, has rejected a second takeover bid by American foods giant, Kraft Foods.
The rejection follows closely on the heels of a hostile takeover bid by Kraft Foods in September which was rejected outright on the grounds that it was below Cadbury’s value.
Had Cadbury accepted the new bid, its Kenyan subsidiary would have had the opportunity to distribute a wide range of popular sweets and chocolate brands produced by Kraft Foods.
Cadbury—a British candy maker, rejected the revised $16.4 billion hostile bid from the American firm associated with billionaire Warren Buffet that would have created a multi billion dollar company with annual revenues of over $50 billion.
Kraft is the second largest sweets company in the world after Nestle and the largest company in the US in terms of sales.
Cadbury distributes its sweets and chocolates, including its popular cadbury dairy milk brand, through a local subsidiary, Cadbury’s Kenya Limited, a channel that could be exploited by the American firm to penetrate the Kenyan market.
“The Board recommends shareholders reject the offer and in due course will be communicating with shareholders to set out in more detail why it believes the offer falls well short of reflecting the value of Cadbury,” the British candy maker said in statement.
The deal would have seen Kraft Foods which employs more than 100,000 workers across the world— exploit the distribution and marketing channels already created by Cadbury in Africa and in Kenya to distribute some of its top brands.
The acquisition of Cadbury’s by Kraft Foods would enhance the position of the local Cadbury’s subsidiary, potentially altering the competitive landscape in the confectionery market.
In formally filing its bid for Cadbury, Kraft Foods retained the offer of 745 pence per Cadbury share it made in September but a surge in Cadbury’s share price since then has meant that the value of the deal was reduced to 717 pence per share.
“The repetition of a proposal which is now of less value and lower than the current Cadbury share price does not make it any more attractive,”
Shareholder value
Cadbury chairman Mr Roger Carr said in a statement “As a result, the Board has emphatically rejected this derisory offer and has strengthened its resolve to ensure the true value of Cadbury is fully understood by all.”
The British candy maker says Kraft Food’s offer does not come close to reflecting the true value of Cadbury.
Mr Carr said that Cadbury is an exceptional standalone business with strong iconic brands, a sharp category focus and an enviable geographic scope.
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