Cadbury Again Rejects Kraft, Expects Rival Bids

LONDON -- Cadbury rejected a $16.2 billion offer from Kraft Foods, while hinting at the possibility of rival bids and promising better growth and bigger dividends.

"We have had indications of interest from third parties on possible business combinations," Cadbury Chief Executive Todd Stitzer said during a conference call, Reuters reported. Cadbury issued its defense document against Kraft's takeover bid, warning shareholders against letting Kraft "steal" Cadbury, Reuters noted.

Kraft has declined to raise its bid from the original terms announced Sept. 7, with 300 pence ($4.87) per share in cash and the rest in new Kraft shares.

Cadbury Chairman Roger Carr told investors two companies had expressed interest publicly. "We've made clear to both we are not for sale, but will consider any compelling and fully financed offers. At the moment, nothing like this has been received," he said in the report.

The Hershey Co. and Ferrero have expressed interest in the candy company as well.

"Whilst we have never regarded potential interest from Ferrero or Hershey as amounting to the likelihood of a competing hostile approach, some form of trading partnership could form part of a so-called 'white knight' partnership," analyst Jeremy Batstone-Carr, of Charles Stanley, told Reuters.

Cadbury and U.S.-based Hershey have held talks over a friendly bid by the U.S. firm, according to the Sunday Telegraph, while Nestle is said by analysts to be watching events surrounding Cadbury closely.

"Kraft is trying to buy Cadbury on the cheap to provide much-needed growth to their unattractive low-growth conglomerate business model," said Carr. "Don't let Kraft steal your company with its derisory offer."

Kraft said it still believes its offer was in the best interest of shareholders and that a combination of the two companies would create "significant growth opportunity."

Cadbury raised its underlying annual sales growth target to between 5 percent and 7 percent from its previous 4 percent to 6 percent range, Reuters reported. The company foresees operating margins by 2013 in a range of 16 percent to 18 percent after looking for mid-teen margins by 2011, compared with 11.9 percent in 2008.

"Assuming the group were to achieve these new targets, Cadbury might be worth something like 675 pence ($10.95) per share on fundamentals. We still believe Kraft needs to offer closer to 850 pence ($13.79) to win the day," Alex Molloy of Credit Suisse told Reuters.

Under United Kingdom's takeover rules, Cadbury shareholders have until Feb. 2, 2010, to either accept or reject Kraft's offer.

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