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Cadbury has received a shock £10 billion takeover bid from a US rival.
Kraft, the company behind Oreo biscuits and Terry's Chocolate Orange, said it wanted to buy Cadbury to create a “global powerhouse in snacks, confectionery and quick meals”.
The board of Cadbury, which was founded by Quakers 185 years ago, has rejected the approach but may be forced into talks by City shareholders. Cadbury shares increased nearly 40 per cent today at news of the bid.
Kraft, the world's second biggest sweet maker, claims it would protect Cadbury's heritage and would save a British factory earmarked for closure.
Cadbury, which makes Dairy Milk, Crunchie, Flake and Creme Eggs, is one of the best known global brands still in British hands and a takeover attempt is certain to trigger strong opposition. Britain's other leading sweet manufacturer, Rowntree, was bought by Swiss company Nestlé in 1989 in a bitterly contested deal.
The prospect of a protracted takeover battle for Cadbury will be greeted with joy in the City which has been starved of lucrative mergers and acquisitions work. The advisory and legal fees on a deal of this size will run to tens of millions of pounds.
Kraft, a business with sales of £25 billion a year, said it would seek to grow the business and create jobs in the UK.
The company has been under fire from health food campaigners which say its products are part of the reason why the US and other countries have so many health problems linked to obesity.
Kraft said in a statement today: “We are eager to build upon Cadbury's iconic brands and strong British heritage through increased investment and innovation. We have great respect and admiration for Cadbury.”
Kraft said it hoped to keep open Cadbury's Somerdale factory near Bristol, which is currently scheduled to close, while also investing in the firm's Bournville factory near Birmingham.
The deal is being led by some of Wall Street's best known financiers, including Bruce Wasserstein of investment bank Lazard. Cadbury is headed by Todd Stitzer, an American who was paid £4 million last year.
Cadbury confirmed it had received and rejected Kraft's takeover proposal, which it said "fundamentally undervalues the group and its prospects".
It added: "The board is confident in Cadbury's standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope and the continued successful delivery of its Vision Into Action plan."
Reader views (2)
That will upset Nestles then, they thought that was their role.
The really good news is that if Kraft muck this product up then there is bound to be a consumer flight to smaller brands such as Thorntons
- James, London UK, 07/09/2009 12:45
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The assurances from Kraft are meaningless unless they put Cadbury into a trust! A look at the company history shows over the years, even when it was part of Philip Morris, a tendency to buy up top rate European brands and exploit them wisely. EU policies will ensure these companies get hold of agricultural by-products such as whey,milk powder and vegetable fat and turn them into high profit lines. Cadbury is a firm with some ethics and has put efforts into catering for vegetarians and muslims in an open way. It does listen to consumers and I have not had that impression from Kraft.Pick up a packet of Oreo biscuits and look for the country of manufacture and be informed.
- Jack Spratt, Richmond, Surrey, 07/09/2009 10:13
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