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LONDON -- Reuters reported yesterday that Kraft Foods said it was intent on pursuing Britain-based Cadbury, which soared in value after it snubbed a premium-rich $16.7 billion offer from the U.S. company.
Analysts expected Kraft, North America's biggest food group, would have to raise its bid by up to 40 percent after shares in the world's No. 2 candy and chocolate maker increased by almost half on news of the takeover offer.
Cadbury's stock closed up 38 percent, peaking close to its all-time high at 808 and well ahead of Kraft's 745 pence-per-share pitch, according to Reuters.
"If the deal gets done, it sends a positive signal about the [merger and acquisition] market. There is not that much more consolidation to be done in confectionery, but a successful outcome would make global consumer companies more likely to pursue their own [merger and acquisition] targets," a senior banking source told Reuters.
Many feel the two firms' product portfolios are largely complementary.
According to Reuters, Cadbury’s top brands include Bassett's Liquorice Allsorts, Maynards Wine Gums and trademark chocolate bars while Kraft’s many brands include Maxwell House coffee, Oreo cookies and Ritz crackers.
Kraft's cash-and-shares offer, outlined in a letter Aug. 28, represented a 31 percent premium to Cadbury's closing share price from last Friday.
Cadbury Rejects Kraft Takeover Bid