Cadbury swiftly rejected the offer.
The offer values Cadbury at 717 pence (7.17GBP) per share, lower than the 745 pence per share that was rejected in September. But by making its offer official, Kraft effectively sidesteps Cadbury’s board and appeals directly to shareholders. It will be hoping that this could help it to get a better price, as the two companies remain divided on Cadbury’s value.
Commenting on the offer, Irene Rosenfeld, chairman and CEO of Kraft Foods, said:
"We remain convinced of the strategic merits for both companies of combining Kraft Foods and Cadbury. We believe that our proposal offers the best immediate and long-term value for Cadbury's shareholders and for the company itself compared with any other option currently available, including Cadbury remaining independent."
By launching the bid on Monday, Kraft opens up a 28-day window to publish a prospectus detailing the offer for shareholders. It could then have up to 60 days in order to collect enough shares to complete the deal.
Kraft has offered Cadbury shareholders 300 pence and 0.2589 new Kraft shares for each Cadbury share. Nominally, this is the same offer as was tabled in September, although the lower value of Kraft shares and lower dollar value means it is now worth less.
Kraft’s interest in Cadbury stems from the confectioner’s broader exposure to international markets, particularly its strong position in developing markets like India and Mexico. Rosenfeld has said that a combined Kraft and Cadbury would significantly expand the reach of both businesses and create synergies worth in the region of $625m.
However, chairman of Cadbury Roger Carr described Cadbury as “an exceptional standalone business”.
He said in a statement: “The repetition of a proposal which is now of less value and lower than the current Cadbury share price does not make it any more attractive. As a result, the Board has emphatically rejected this derisory offer and has strengthened its resolve to ensure the true value of Cadbury is fully understood by all…
“Kraft's offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model.
“I am confident Cadbury will deliver significant value – which should accrue wholly to our shareholders.”
If Kraft had failed to come up with an offer before Monday’s deadline, the company would have had to walk away for at least six months under the UK Takeover Panel’s so-called ‘put-up-or-shut-up’ rule.
Despite speculation over whether a bidding war would emerge following Kraft’s initial offer, as yet no other contenders have stepped forward, and Unilever ruled itself out as a possible bidder last week.