9 November, 2009
UPDATE 4-Kraft turns hostile in $16 bln bid for Cadbury
* Kraft turns hostile on Cadbury with formal bid
* Bid values Cadbury at 713 p/share vs 745 p in Sept
* Same terms: 300p cash + 0.2589 Kraft shrs/Cadbury share
* Cadbury rejects "derisory offer"
* Cadbury shares up 0.3 pct, underperforming London market
(Adds further details, analyst, updates shares)
By David Jones
LONDON, Nov 9 (Reuters) - Kraft Foods (KFT.N) chief Irene Rosenfeld stuck to her guns in the pursuit of candy maker Cadbury (CBRY.L), refusing to sweeten her $16.4 billion bid on Monday and taking it directly to Cadbury shareholders.
The North American food giant Kraft effectively rubber-stamped the cash and shares terms of its original approach, which Cadbury rejected two months ago, triggering a bid battle that could last up to three months.
Having already rejected the same informal offer two months ago, Cadbury lost no time rejecting the formal bid, or "derisory offer", as chairman Roger Carr termed it.
Kraft's chief executive Irene Rosenfeld has said she would not overpay for Cadbury, while Cadbury's chief executive Todd Stitzer has said a link-up with Kraft made no strategic sense and it has a strong future as an independent sweetmaker.
"We remain convinced of the strategic merits for both companies of combining Kraft and Cadbury," said Kraft's chief Executive Irene eif Rosenfeld said in a formal offer statement.
Cadbury's shares were up 0.3 percent at 760 pence at 1410 GMT.
The bid values Cadbury shares at 713 pence or 9.8 billion pounds ($16.44 billion), compared with 745p a share, or 10.2 billion pounds, at the time of Kraft's approach in September.
"The process will be drawn out and they will come back with a higher offer, although not as high as some are speculating about," said analyst Clive Black at broker Shore Capital.
Kraft is offering Cadbury shareholders 300p in cash and 0.2589 new Kraft shares for each Cadbury share, unchanged from the September offer.
"There's a good chance they (Kraft) will have to increase this a little bit. "I still think the cash side is likely where they have the opportunity to make it more attractive to Cadbury shareholders," and Matt Arnold at broker Edward Jones.
The bid for the maker of Dairy Milk chocolate and Trident gum from the Oreo cookie and Velveeta cheese group was expected after the UK Takeover Panel had ruled that Kraft had to make a formal bid by 1700 GMT Monday or walk away for six months.
Cadbury is the world's second-largest confectionery group, while Kraft is number five, with brands such as Toblerone, Cote D'Or, Terry's and Suchard, and bringing them together would pip privately owned Mars-Wrigley to the global No 1 spot.
Kraft's move now gives it 28 days to post its official offer document to Cadbury shareholders, which will then trigger the 60-day bid timetable under UK takeover rules.
For an Instant View on the bid click [ID:nL918790]
For a Take A Look, click [ID:nL0444683]
For a Factbox on Kraft Foods click [ID:nN08237219] (For a graphic showing Cadbury and Kraft comparisons, click here: here) (For a graphic showing global confectionery market share, click here: here) Reporting by David Jones; Editing by Greg Mahlich/Will Waterman) ($1=.5960 Pound)
Source: http://www.reuters.com
UPDATE 4-Kraft turns hostile in $16 bln bid for Cadbury Added: (09.11.2009)
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