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    Kraft Stands By Bid for Cadbury

    Analysts believe a higher offer is required to win over British confectioner.

    LONDON -- After its bid was rebuffed again by British chocolatier Cadbury, Kraft Foods vowed to maintain discipline in its pursuit of acquiring the company, suggesting the U.S. company will resist raising the price of its hostile bid, Reuters reported.

    "Kraft will continue to maintain a disciplined approach with respect to the acquisition of Cadbury in line with the criteria outlined in our offer documentation," Kraft Foods Chairman and CEO Irene Rosenfeld said in a statement cited by Reuters.

    In a rebuttal of Cadbury's aggressive defense statement, Kraft said a combination of the companies would deliver "substantially more value than Cadbury could achieve on its own."

    Kraft's offer, totaling $16.3 billion, is worth 729 pence per share but analysts cited by Reuters told the news agency it will need to pay 820 to 850 pence in order to be successful.

    "We think Kraft will need to raise its offer toward 820 pence even if there is no counter bid," Evolution Securities analyst Warren Ackerman told Reuters. "The emergence of credible counter bidders for Cadbury could mean that Kraft has to materially increase its bid to be successful. We think an 850 pence bid with a 400 pence cash element could satisfy the criteria Kraft has laid out for remaining a disciplined buyer," he added.

    The Hershey Co. and Italy's Ferrero have both indicated they are contemplating bids, while Nestle is also viewed by analysts as a potential suitor, the report stated.

    On Monday, Cadbury presented the prospect of rival bids and promised bigger dividends and stronger growth as it again declined Kraft's offer. Shares in Cadbury were down 0.75 percent to 789 pence, but still above Kraft's proposal, according to the report.

    In response, Kraft urged shareholders to question whether or not Cadbury can hit revenue growth targets, deliver margin targets without further restructuring spending, achieve margin goals and other points.
    "We have heard nothing from Cadbury that surprises us. Cadbury's defense document only reinforces our belief that there is a compelling strategic and financial rationale to combining these two companies and that doing so would be in the best interest of both companies' shareholders," said Kraft's Rosenfeld.

    Meanwhile, a spokesman for Cadbury said: "Neither our shareholders nor the market as a whole seem to have had any problems understanding the detail in our business plan or the defense we presented yesterday. No smoke or mirrors will change the fact that Kraft's offer remains derisory."

    Related News:

    Cadbury Again Rejects Kraft, Expects Rival Bids

    Cadbury to Formally Respond to Kraft Offer Dec. 14

    Report: Hershey, Ferraro Would Split Cadbury

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