LONDON: Britain’s Cadbury said it has received interest from other bidders after raising its growth targets and reporting upbeat trading, as it dismissed a £10 billion ($16.5 billion) bid from Kraft Foods.
The Dairy Milk chocolate maker on Monday warned shareholders not to let Kraft “steal” Cadbury, kicking off a seven-week fight for its independence, while declining to name Hershey or Italy’s Ferrero who have said they are contemplating bids for Cadbury.
“We have had indications of interest from third parties on possible business combinations,” Chief Executive Todd Stitzer told a conference call after issuing its defense document.
Asked about this, Chairman Roger Carr told investors on a conference call that two companies had expressed their 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. Cadbury shares rose to an early high of 797-1/2 pence but last traded up 0.2 percent at 792 pence at 1200 GMT compared to Kraft’s hostile bid worth 727 pence. Most analysts believe Kraft will need to pay 820-850 pence to win Cadbury.
“We are not overwhelmed by Cadbury’s defense... This is not enough to squeeze a massively higher offer from Kraft in our view,” said analyst James Edwardes Jones at brokers Execution, who added, “It is difficult to see why Kraft needs to pay up much more than 800p.” Analysts said there were few surprises in Cadbury defense with its 2009 outlook unchanged, while saying it could hit higher margin without further jobs cuts or factory closures and its higher sales growth would rely on emerging market growth.
“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,” said analyst Jeremy Batstone-Carr at brokers Charles Stanley.
Cadbury and US-based Hershey have held talks over a friendly bid by the US 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 Cadbury Chairman Roger Carr. “Don’t let Kraft steal your company with its derisory offer.” Kraft had no immediate response to Cadbury’s defense.
Highlighting the strength of its “standalone” strategy, Cadbury outlined a higher growth vision for an independent future as a fully focused confectionery group built around strong sales growth and a rise in profit margins.