Cadbury on sale

Cadbury revealed yesterday it has received approaches from The Hershey Company and Italy's Ferrero International SA as it launched a robust defence against a hostile £9.8 billion (Dh59.8 billion) from Kraft Foods Incorporated.

Cadbury Chairman Roger Carr said the statements of intent from Hershey and Ferrero were too preliminary to start proper talks as he warned shareholders not to let Kraft "steal your company with its derisory offer".

Performance targets

The British chocolate and gum maker also raised its long-term performance targets to play up its position as a strong, independent company.

The prospect of the 195-year-old company falling into foreign ownership has caused some consternation in Britain were it is a much-loved brand — a member of Cadbury's founding family has been publicly critical and the country's leading labour union fears large-scale job losses.

But Carr left open the door for some kind of tie-up, saying that Cadbury was open to discussion with any potential suitor — Kraft included — that made a compelling offer that fully valued the company.

"As yet, we've only had one offer, which is far from compelling, it is... derisory on a good day because it's falling, and we've had a statement of intent from two people that are yet to come forward with an offer," Carr told reporters.

"We have told them very clearly what the rules of the game are, but until they come forward... that meets those criteria, then there is no point in getting into conversations," Carr said when asked if the board had held talks with Hershey and Ferrero.

Bidding war

Shares in Cadbury have shot up in recent weeks on the prospect of a bidding war following Kraft's unsolicited approach. Analysts have also suggested that Nestle SA may be interested, although the Swiss company has made no comment.

Kraft — the maker of Oreo cookies, Nabisco crackers and its namesake cheese — took its cash and shares offer straight to shareholders of the British candy company earlier this month after the Cadbury board rejected an almost identical approach.

The proposed deal, which would create a global giant with an estimated $50 billion in combined revenue, includes 300 pence in cash and 0.2589 new Kraft shares for each Cadbury share. That is worth 727 pence a share, based on the close of trading on December 11.

The stock was trading well above Kraft's bid price at 792 pence per share yesterday, up 0.25 per cent.

While Kraft CEO and chairman Irene Rosenfeld has argued the US company's offer is a substantial premium to Cadbury's "unaffected" share price, analysts suggest Kraft would need to raise its offer to around 850 pence to even begin talks.