Meeting to discuss Cadbury bid
By David Jones |
January 14, 2010, Thursday
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Print Edition
Print Edition
BRITAIN'S business secretary Peter Mandelson is expected to add his weight to union calls for Cadbury shareholders to resist Kraft Foods' bid, which got a boost from the exit of a possible rival.
As sources said Italian chocolatier Ferrero had pulled out of the race, Mandelson called a group of institutional investors to meet him today to discuss their role in takeovers, and Kraft's offer for Cadbury looks likely to top his agenda.
Ferrero's withdrawal leaves only Hershey Co as a possible rival to Kraft's 10.5-billion-pound (US$17 billion) hostile bid, but analysts said the United States chocolate maker would struggle to finance a bid to take over the larger Cadbury on its own.
For four months Cadbury has been trying to fend off cheese and cookie maker Kraft's cash and shares bid, currently worth 766 pence a Cadbury share, and analysts and investors say Kraft must offer more to overcome the Dairy Milk chocolate maker's defences.
"Ferrero's withdrawal of its interest clears the field for Kraft, but we still expect Kraft to have to pay over 800 pence to win Cadbury," said one analyst.
Analysts said Mandelson has been vocal in supporting Cadbury, but he has no statutory powers to block the bid.
"If you think that you can come here and make a fast buck, you will find that you face huge opposition from the local population ... and from the British government," Mandelson said last month referring to Kraft's bid for Cadbury.
Unite, Britain's biggest trade union, said in a briefing note that nearly 30,000 jobs were at risk if debt-laden Kraft wins, and urged Cadbury investors to put the wider public interest ahead of price.
It argues that Kraft's ownership of Cadbury could put at risk 7,000 jobs directly and at least 20,000 more in the supply chain, and says Kraft has declined to give any assurances over jobs and investment.
"Cadbury has clearly shown its strength as a stand alone company. Contrast that with Kraft's excessive debt, underperformance and the unacceptable risks this brings for Cadbury and it is hard to see any wisdom in this bid," said Unite.
As sources said Italian chocolatier Ferrero had pulled out of the race, Mandelson called a group of institutional investors to meet him today to discuss their role in takeovers, and Kraft's offer for Cadbury looks likely to top his agenda.
Ferrero's withdrawal leaves only Hershey Co as a possible rival to Kraft's 10.5-billion-pound (US$17 billion) hostile bid, but analysts said the United States chocolate maker would struggle to finance a bid to take over the larger Cadbury on its own.
For four months Cadbury has been trying to fend off cheese and cookie maker Kraft's cash and shares bid, currently worth 766 pence a Cadbury share, and analysts and investors say Kraft must offer more to overcome the Dairy Milk chocolate maker's defences.
"Ferrero's withdrawal of its interest clears the field for Kraft, but we still expect Kraft to have to pay over 800 pence to win Cadbury," said one analyst.
Analysts said Mandelson has been vocal in supporting Cadbury, but he has no statutory powers to block the bid.
"If you think that you can come here and make a fast buck, you will find that you face huge opposition from the local population ... and from the British government," Mandelson said last month referring to Kraft's bid for Cadbury.
Unite, Britain's biggest trade union, said in a briefing note that nearly 30,000 jobs were at risk if debt-laden Kraft wins, and urged Cadbury investors to put the wider public interest ahead of price.
It argues that Kraft's ownership of Cadbury could put at risk 7,000 jobs directly and at least 20,000 more in the supply chain, and says Kraft has declined to give any assurances over jobs and investment.
"Cadbury has clearly shown its strength as a stand alone company. Contrast that with Kraft's excessive debt, underperformance and the unacceptable risks this brings for Cadbury and it is hard to see any wisdom in this bid," said Unite.
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