The potential for Cadbury to grow further as an independent business is “constrained”, the boss of suitor Kraft Foods said today (8 September).
Kraft chairman and CEO Irene Rosenfeld, who yesterday launched a GBP10.2bn takeover bid for Cadbury, claimed the UK confectioner would benefit from being part of a “global powerhouse in snacks, confectionery and quick meals”.
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“We have great respect for Cadbury, for its brands, for its employees and for its proud heritage, but I believe that in the current global economy the growth prospects are constrained,” Rosenfeld (pictured) told investor website cantos.com.
“We believe by bringing together these two great companies the opportunity to create a global powerhouse will enable it to compete far more effectively in the future.”
Cadbury has rejected Kraft’s cash-and-share offer, arguing the bid “fundamentally undervalues” the business and insisting it remains “confident” in its “standalone strategy” – a reference to its ‘Vision into Action’ programme set up in 2007 to boost margins and drive efficiency.
Rosenfeld acknowledged that Kraft had been monitoring Cadbury for “quite some time” and said the Dairy Milk and Trident maker had made “excellent progress against the Vision Into Action programme”.
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By GlobalDataHowever, the Kraft boss repeated her belief that a deal between the two companies would benefit both businesses.
“For Cadbury’s shareholders we believe that the premium we have offered is a compelling one and we believe that the nature of our proposal provides both value certainty in the near term as well as the opportunity to benefit from the long-term upside in the synergies that come from combining these two great companies,” Rosenfeld argued. She added a combined company would “have the scale, the scope and the resources to grow faster today and well into the future”.
Industry watchers have offered mixed reactions to the news, with some urging the companies to come together and others questioning the US food giant’s M&A record.
Speculation in the US is circulating that chocolate giant Hershey is preparing a counter bid for Cadbury, although officials at Hershey and controlling shareholder The Hershey Trust could not be reached for immediate comment.
Keith Bowman, an analyst at UK stockbroker Hargreaves Lansdown, said the market believes Kraft will return to the table after its initial bid of 300p in cash and 0.2589 in new Kraft shares per Cadbury share.
“The market seems to generally expect an increased offer from Kraft – may be to something nearer 850p to 900p,” he told just-food.
