Kraft may have to sweeten $16.7-bn bid for Cadbury

Britain’s Cadbury,the world’s second biggest confectionery group,has rejected a $16.7 billion bid approach by Kraft Foods,but North America’s biggest food group still hopes it can clinch a deal. Kraft said on Monday it had offered 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share in the hope that it can create a “global powerhouse in snacks,confectionery and quick meals” with combined revenues of about $50 billion. Cadbury shares jumped 36 per cent to 778 pence at the open,helping lift the European food and consumer goods sector,with Anglo-Dutch giant Unilever up 2.6 per cent and Nestle,the world’s biggest food group,up 0.7 per cent.

Based on Kraft’s own closing share price of $28.10 on September 4 and a sterling exchange rate of $1.6346,the offer values each Cadbury share at 745 pence and the company as a whole at £10.2 billion ($16.66 billion). The offer is a 31 per cent premium to Cadbury’s closing share price of 568 pence on September 4,Kraft said. Cadbury declined to comment on Kraft’s statement.

Cadbury’s board had rejected the proposal,Kraft said in a statement,adding that it was “committed to working toward a recommended transaction and to maintaining a constructive dialogue.” The US company said it had published details of its approach in order to “encourage and further that process”.