Cadbury's stinging rebuke to suitor Kraft

CADBURY has accused Kraft of trying to buy it "on the cheap" as it set out a robust defence against the US suitor's £10bn hostile bid.

CADBURY has accused Kraft of trying to buy it "on the cheap" as it set out a robust defence against the US suitor's £10bn hostile bid.

The Dairy Milk maker upped long-term performance targets and said profit margins for the current year were expected to be higher than original guidance, as it sought to underline its prospects as an independent company.

Cadbury chairman Roger Carr warned shareholders not to let Kraft “steal your company with its derisory offer”.

The group’s defence comes amid reports that Cadbury is in talks with US rival Hershey over a possible “white knight“ offer.

Cadbury declined to comment on the reported discussions with Hershey, but confirmed expressions of interest by potential rival bidders.

Hershey has already said it is considering options for Cadbury, as has Ferrero Rocher maker Ferrero.

Cadbury is widely speculated to favour a tie-up with Hershey, with which it already has a business relationship as Hershey holds a licence to make Dairy Milk bars and Cadbury Creme Eggs in the US. Kraft’s approach – worth around 725p a share – is also seen as being far short of the 850p price analysts believe Cadbury can fetch and has been quickly dismissed by the group’s board as being “wholly inadequate”.

Cadbury shares are currently trading at just under 800p each.

Mr Carr said: “Cadbury is an exceptional business worth much more than the offer put forward by Kraft.”

He added: “Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model. Don’t let Kraft steal your company with its derisory offer.”

The increased performance targets will see Cadbury aim for sales growth of 5% to 7% a year for the next four years and improved margins, while also seeking to please investors with double-digit growth in shareholder payouts.

Cadbury has already lifted revenue guidance for the current financial year and said recent trading was in line with the upgraded expectations thanks to emerging market growth for chocolate sales and “excellent” performance across its candy range.

It is also hoping to slash its supplier network as part of the plan to deliver better figures.

Investors now have until January 5 to make up their minds on the Kraft bid, with the whole process subject to a 60-day timetable under Takeover Panel rules. But it may turn into a lengthy takeover battle if other groups that have been circling Cadbury formally enter the fray.

Cadbury began life as a grocer’s shop in Birmingham’s fashionable Bull Street in 1824. Dairy Milk is the UK’s top-selling chocolate bar and more than 250 million are sold every year in 33 countries.

Analyst Nicolas Ceron at Numis Securities said he was “sceptical” about Cadbury’s new long-term performance aims, given the lack of detail over plans to meet the target.


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