Kraft Nears Victory in Cadbury Battle

cadbury2This morning, Cadbury’s board has advised shareholders to accept an improved offer from US food company Kraft.

The improved offer values Cadbury at £11.5bn, an increase of £1bn from the original offer made last November, and is worth 840 pence per share, with Cadbury shareholders also receiving a 10p dividend.

If the deal goes through, shareholders will receive 500p per share in cash, with the balance being paid in Kraft shares.

The deal has been struck at a price below thgat which was thought necessay, with some analysts expecting a bid of over 900p to secure the deal.

However, the threat of a counter-bid from US rival Hershey appears to have diminished, leaving the way clear for Kraft.

Private investors will need to consider any CGT implications from the forced encashment of part of their holding.

Also, individuals will need to consider whether or not they wish to hold shares in Kraft – as always with overseas holdings they will need to consider the impact of currency fluctuations (ie what is the outlook for the dollar) and probable higher dealing costs, as well as their views on the company, which is loading itself with £7bn in debt to help finance the deal.

Cadbury shares are currently trading at 838p, indicating a high degree of certainty that the deal will succeed.

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