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December 15, 2009

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More firms join race to purchase Cadbury

CADBURY Plc revealed yesterday it has received approaches from rival suitors to Kraft Foods Inc as the British candy maker launched a defense against the United States-based company's attempts to buy it "on the cheap" with a 9.8 billion pound (US$16.3 billion) hostile bid.

Cadbury Chairman Roger Carr warned shareholders not to let Kraft "steal your company with its derisory offer" as the British chocolate and gum maker increased its long-term performance targets to play up its position as a strong independent company.

But it also revealed it had been approached by a number of other suitors, which executives declined to name, with a mix of proposed offers.

"Cadbury is an exceptional business worth much more than the offer put forward by Kraft," Carr said in an official defense document posted to the company's shareholders.

"It is clear to all that Cadbury is a particularly attractive asset in the sector with iconic brands, a sharp category focus and an enviable geographic footprint."

Kraft - the maker of Oreo cookies and its namesake cheese - took its cash and shares offer to shareholders of the British candy company earlier this month after the Cadbury board rejected an almost identical approach.

The proposed deal includes 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share, worth 727 pence a share at the close of trading on December 11.

"Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model," Carr told shareholders. "Don't let Kraft steal your company with its derisory offer."

Shares in Cadbury have shot up in recent weeks on the prospect of a bidding war and CEO Todd Stitzer confirmed yesterday that the company had received "indications of interest from third parties on possible business combinations."

US chocolate maker The Hershey Co has previously said it was considering an offer alongside Italy's Ferrero International SA.


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