Kraft bids for Cadbury and Cadbury says "no"

In the midst of a hostile takeover bid, Kraft (KFT) has set up a series of investor conference calls, which will include its CEO defending its $16.75 billion offer for Cadbury. The fight between the two companies has already gotten ugly.

Kraft made the bid last week but Cadbury turned it down, so the American firm has made its offer public, probably to put pressure on the British company's board.

The offer is a 31 percent premium to where Cadbury traded last week. Cadbury issued a statement saying, "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. The board believes that the proposal fundamentally undervalues the group and its prospects."

In its comments about the proposed transaction, Kraft said, "As we have done, Cadbury has built wonderful brands by focusing on quality, innovation and marketing, but we believe the next stage in Cadbury's development will be challenging, given the increased importance of scale in the industry."

According to the Financial Times, Nestle hinted it could make its own bid. As is true with many hostile offers, it would not be surprising if Kraft raises it bid. No matter what happens, it appears that the moribund M&A business is making a comeback, probably due to an improving economy and easier access to credit. With the stock prices of some large companies still depressed, the Kraft bid will not be the last hostile one by a large company this year.

Douglas A. McIntyre is an editor at 24/7 Wall St.

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