Kraft must improve bid to capture Cadbury
Published 18/01/2010 | 05:00
Kraft Foods must raise its hostile £11bn (€12.4bn) bid for Cadbury by at least 10pc to stand a chance of capturing the UK firm, an investor survey shows.
Kraft, whose offer is worth about 771p a share, needs to raise that to at least 850p, the median price named by nine major Cadbury shareholders, who together account for about 11pc of the shares. A deadline to increase the bid passes tomorrow.
Cadbury closed at 793.5p last Friday, reflecting the chance the offer will be raised or a rival suitor such as Hershey will emerge.
It is believed Hershey is stepping up efforts to prepare a bid and plans to make a decision after Kraft's final offer. Kraft chief executive Irene Rosenfeld has vowed to stay "disciplined" on price.
"When you look at the numbers that make sense for both Cadbury and Kraft, their offer is materially lower than that," said Peter Langerman, chief executive of Mutual Series, which has a 7.7pc stake in Cadbury.
Franklin Resources will reject the bid if it isn't improved, Mr Langerman said. The UK company's second-largest investor, Legal & General Group, said it remains opposed to Kraft's offer on valuation grounds.
"We continue to believe that the current Kraft bid does not reflect the long-term value offered by the company on a standalone basis," Mark Burgess, head of equities at Legal & General, said. The insurer owns a 5.1pc stake in the chocolate maker. (Bloomberg)