British pride takes a knock in Kraft's Cadbury takeover
Published 20/01/2010 | 05:00
KRAFT Foods sealed a friendly deal to buy the British chocolate maker Cadbury for about £11.9bn after frantic last-minute talks had broken an impasse over the price.
Kraft chief executive officer Irene Rosenfeld had to inject more cash into her bid and drop the number of new shares to win over Cadbury chairman Roger Carr and mollify billionaire investor Warren Buffett, the US food company's biggest shareholder.
The deal will create the world's biggest confectioner and analysts see little likelihood of a counterbid.
The cash-and-stock agreement, which dealmakers said was struck after all-night negotiations at the London headquarters of investment bank Lazard, values each Cadbury share at 840p. Shareholders are also set to get a 10p special dividend, bringing it up to 850p.
Rosenfeld had prompted the talks by telephoning Carr on Sunday and suggesting a price of 830p. Although Carr insisted on 850p, they met on Monday morning in central London, where she offered 840p.
Carr was firm and had his board's backing to insist on 850p, so advisers for both companies worked into the night to agree the deal.
The final offer marked a 14pc increase on Kraft's initial bid of 745p and was about 11pc above the value of the offer on Friday. The price tag is also 50pc above where Cadbury's stock had been trading on the day before Kraft's initial bid was disclosed in early September.
However, the deal has met with resistance in Britain. Union jacks fluttered outside Cadbury's Bournville site yesterday -- where the company has been based since 1879 -- as employees lamented the news that a beloved national brand was falling into US hands.
"Hang your heads in shame," read one banner, capturing a feeling that patriotic pride as well as jobs were at stake in the takeover by US giant Kraft.
British Prime Minister Gordon Brown said he wanted to protect British investment and jobs at Cadbury, illustrating the political sensitivity of the deal in an election year.