US FOOD giant Kraft fired the starting gun today on a 60-day takeover battle for Dairy Milk maker Cadbury.
Kraft’s hostile bid campaign was officially launched when the group posted details of its £10bn cash and shares offer, ahead of a deadline on Monday.
The offer from Kraft - the company behind brands including Toblerone, Dairylea and Kenco coffee - values Cadbury at around 713p a share, although Cadbury’s shares were trading at around 800p today.
Kraft is now posting its offer out to Cadbury’s shareholders - including some 50,000 private investors - and the chocolate giant has two weeks to respond to the offer in a defence document.
The first deadline for shareholder acceptances has been set at January 5, with the whole process subject to a 60-day timetable under Takeover Panel rules.
Irene Rosenfeld, chairman and chief executive of Kraft, said: "We remain confident that the unique combination of Kraft Foods and Cadbury would create a significant growth opportunity for both businesses.
"That’s why we believe this offer is in the best interest of both companies’ shareholders."
But the takeover tussle may crank up a notch if other groups that have been circling Cadbury formally enter the fray.
Confectioners Hershey and Ferrero have already said they were considering their options for Cadbury, but have yet to make a move.
Today’s formal offer from Kraft may smoke out a counter bid from the firms, which could also join forces for a joint approach, according to speculation.
Cadbury’s defence is likely to reiterate its belief in strong prospects as a standalone company.
Roger Carr, chairman of Cadbury, dismissed Kraft’s initial bid as "derisory" and not even "remotely close" to the true value of the firm.
While Kraft recently disappointed with weak third-quarter results - downgrading revenue guidance - Cadbury came out fighting with an impressive 7% hike in like-for-like sales.
And it is thought to be holding out for an offer closer to 850p a share.
Cadbury is also seen as favouring a tie-up with Hershey, with which it already has a business relationship as Hershey holds a licence to make Dairy Milk bars and Cadbury Creme Eggs in the US.
Cadbury began life as a grocer’s shop in Birmingham’s fashionable Bull Street in 1824. Dairy Milk is the UK’s top-selling chocolate bar and more than 250 million are sold every year in 33 countries.
