Kraft Is Preparing to Sweeten Its Bid for Cadbury

Before you go, we thought you'd like these...
Before you go close icon
So far, Kraft's (KFT) bid to acquire Cadbury (CBY) hasn't made much progress. The U.K. food company has rejected the American company's offer, Cadbury's large institutional investors are supporting management and there are rumors that several other companies in the sector, including Hershey (HSY), are preparing bids of their own. The current Kraft bid is 10 billion pounds, or roughly $16 billion. Cadbury is trading above that, an indication that investors expect Kraft to lift its offer or that another suitor will offer to pay more.%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% It now appears that those investors' expectations are correct. On Sunday, The Times of Londonreported that Kraft will raise the value of its Cadbury offer within a matter of days. The Times says that, under U.K. law, "Kraft has to make a move by January 19, after that date it can make a higher offer only if a rival takeover bid is made by another suitor."

The value of the offer isn't the only reason that Kraft's bid hasn't made more headway. Kraft's financial results recently have been lackluster, and Wall Street does not expect them to improve much, based on analyst estimates for the last quarter of 2009 and the current year.

The turnaround effort at Kraft that Irene Rosenfeld initiated after she became CEO has largely failed. This leaves investors with the impression that Kraft is "buying growth" with its Cadbury bid. And that's something that doesn't sit well with most Cadbury shareholders -- unless, of course, the price is right.
Read Full Story


DJIA 20,821.76 11.44 0.06%
NASDAQ 5,845.31 9.80 0.17%
S&P 500 2,367.34 3.53 0.15%
DAX 11,804.03 -143.80 -1.20%
NIKKEI 225 19,283.54 -87.92 -0.45%
HANG SENG 23,965.70 -149.16 -0.62%
USD (per EUR) 1.06 0.00 0.01%
USD (per CHF) 1.01 0.00 0.02%
JPY (per USD) 112.19 0.01 0.00%
GBP (per USD) 1.25 0.00 0.01%

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners