Kraft Goes Hostile In Bid For Cadbury

Kraft, the giant US food company, finally made a hostile takeover for Cadbury just hours before the ‘put up or shut up’ deadline imposed by the Takeover Panel following thier initial approach in September.

kraftThe bid is on exactly the same terms as their indicative offer – 300p in cash and 0.2589 Kraft shares for each Cadbury share.

This is most likely the start of a long battle for ownership of Cadbury.

Kraft has yet to set out a strong business case for ownership of Cadbury, and for private shareholders the nature of this bid shows the risk involved in owning overseas stock.

Although the bid is on the same terms as announced in September, the bid is actually worth less to Cadbury shareholders.

Kraft’s share price has fallen, but the offer has also been negatively impacted by the continued fall of the US dollar.

The bid is now worth 717p a share, compared to 745p in September.

cadburyThe issue of currency risk is often overlooked by private shareholders, but it can have a significant effect on the performance of your portfolio.

Shares that rise in nominal value can have those gains offset by fluctuations in currency markets.  Private shareholders should consider their views on the both the outlook for the company and the currency.

Cadbury have rejected the offer, describing it as “derisory”, although the offer will be put to shareholders. 

Private shareholders will have the opportunity to make their opinion count, although any decision will be effectively taken by institutional shareholders who wield the greatest voting power.

  1 comment for “Kraft Goes Hostile In Bid For Cadbury

  1. CityAnalyst
    December 5, 2009 at 1:36 pm

    Kraft Foods has posted its offer document for Cadbury, valuing the Cadbury at £10.1bn.

    Kraft is offering 300p in cash and 0.2589 new Kraft shares for each Cadbury share held and exchanged.

    Kraft said the offer valued Cadbury shares at 713p each, based on the closing share price of $26.50 per Kraft share on 1 December.

    Cadbury’s shares are currently trading at 801p, reflecting expectations that a higher bid will be made.

    Shareholders have until 5 January 2010 to respond to the offer.

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