Kraft may sweeten Cadbury bid price
Source: Agencies |
January 19, 2010, Tuesday
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Print Edition
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CADBURY shares edged upwards yesterday in anticipation of a higher bid from Kraft Foods, while one major shareholder, Standard Life, said Kraft needed to bid over 900 pence (US$14.70) to get its support.
The North American food giant is expected to sweeten its original takeover offer, currently valued at 769p, before a deadline tonight, with many analysts and investors believing Kraft will have to offer 800p or above to win Cadbury. Cadbury shares rose 1.4 percent to 804.5p by 12:10 GMT yesterday.
"If Kraft wants to get Cadbury they need to pay a full price to get long-term shareholders on their side and that price would have to be, in my view, above 900p a share," David Cumming, head of UK Equities at Standard Life Investments, told BBC Radio.
"The price in the press I noticed at the weekend talking about (was) 800p to 850p - that would not secure support from companies like ourselves," he said.
Standard Life is one of Cadbury's biggest British shareholders, with a stake of just under 1 percent.
On Friday Cadbury's second-largest shareholder, Legal & General, reiterated that the current hostile cash and shares bid from Kraft undervalues the British group.
"The market is anticipating a raised bid from Kraft, which has to be finely judged to win over Cadbury shareholders but for Kraft not to be accused of overpaying," said one analyst.
Under British takeover rules, a potential rival bidder to Kraft for Cadbury that has already shown interest, such as Hershey, has until Saturday to show its hand. Shareholders have until February 2 to decide on Kraft's bid.
The North American food giant is expected to sweeten its original takeover offer, currently valued at 769p, before a deadline tonight, with many analysts and investors believing Kraft will have to offer 800p or above to win Cadbury. Cadbury shares rose 1.4 percent to 804.5p by 12:10 GMT yesterday.
"If Kraft wants to get Cadbury they need to pay a full price to get long-term shareholders on their side and that price would have to be, in my view, above 900p a share," David Cumming, head of UK Equities at Standard Life Investments, told BBC Radio.
"The price in the press I noticed at the weekend talking about (was) 800p to 850p - that would not secure support from companies like ourselves," he said.
Standard Life is one of Cadbury's biggest British shareholders, with a stake of just under 1 percent.
On Friday Cadbury's second-largest shareholder, Legal & General, reiterated that the current hostile cash and shares bid from Kraft undervalues the British group.
"The market is anticipating a raised bid from Kraft, which has to be finely judged to win over Cadbury shareholders but for Kraft not to be accused of overpaying," said one analyst.
Under British takeover rules, a potential rival bidder to Kraft for Cadbury that has already shown interest, such as Hershey, has until Saturday to show its hand. Shareholders have until February 2 to decide on Kraft's bid.
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