Companies that are targeted for takeover frequently approach the takeover panel seeking a so-called ‘put-up-or-shut-up’ action in order to minimize disruption to business and uncertainty for shareholders. Kraft made an offer of £10.2bn (about $16.4bn) on August 28, but Cadbury swiftly rejected the bid, saying that it “fundamentally undervalued” the company and that it “made no strategic or financial sense” for Cadbury.
Today, the company said that it stood by that position.
"Cadbury has a strong position in the global confectionery market and the Board is confident in Cadbury's standalone pure play strategy and growth prospects,” chairman of Cadbury Roger Carr said in a statement. “We have made our position on Kraft's proposal very clear and we welcome the Panel's decision today in the interests of obtaining clarity and certainty for our shareholders and employees at the earliest opportunity."
Cadbury’s share price had risen half a penny to 799.5 pence at 11.18am in London trading following the Takeover Panel’s decision, 11 percent above Kraft’s original offer.
Kraft will now have until 17.00 GMT on November 9 to make another bid, or it will have to walk away for at least six months. The Takeover Panel said in a statement that “each of the parties has accepted this ruling.”
Cadbury lost its status as global confectionery leader after Mars paid $23bn for Wrigley's global business in April last year.
Analysts have suggested that Cadbury is particularly attractive to Kraft partly because the US company has hedged less of its cocoa than the British confectioner at a time of record-high cocoa prices, according to the Financial Times. This could make Kraft vulnerable to cocoa price spikes, like the one experienced last week, when London cocoa prices reached a 24-year high. Concerns over future supply were sparked by an announcement from major cocoa producer Ivory Coast that the 2009/2010 crop will be flat or down on last year because of disease and dying trees.
But Kraft told FoodNavigator-USA.com: “We are a $42 billion company and cocoa affects a very small part of that total.”
There has also been speculation that if Kraft chooses to make an offer for Cadbury, Nestle, Hershey, or both could join the fray with a counterbid. If so, the timeline for an offer could be extended further. However, neither has yet made a move.