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Kraft Finally Eats Up Cadbury

published  First Published: 19/01/2010
Article written by: News Editor: Nigel Brookson
Cadbury's board on Tuesday, agreed to an improved takeover (rejected back on 14th December last year for 10 billion pounds, or 16.5 billion dollars) offer valuing the British group at 11.5 billion pounds (13.1 billion euros, 18.9 billion dollars), or 840 pence per share, the companies announced in a statement.
Cadbury shareholders will also receive 10 pence per share via a special dividend, lifting Kraft's offer to 11.9 billion pounds.
British Prime Minister Gordon Brown, whose Labour Party is widely tipped to lose an upcoming general election, said the government was "determined" to help save jobs at Cadbury amid union fears that Kraft will wield the axe.
Britain's biggest union, Unite, warned that Kraft would be saddled with huge debts following the takeover, putting at risk 7,000 Cadbury posts and 20,000 jobs at the company's sub-contractors.
The friendly takeover meanwhile marks the end of a prolonged and bitter battle for control of 186-year-old Cadbury -- whose products such as Dairy Milk chocolate bars are loved by millions of sweet-toothed customers worldwide.
Cadbury, which began as a small grocer's shop in Birmingham, central England in 1824, has grown into a global operation spanning 60 countries with 45,000 staff.
London-listed Cadbury, led by chief executive Todd Stitzer -- an American -- repeatedly rejected Kraft since an initial approach in September, arguing that its previous cash-and-shares offer worth 10.5 billion pounds was "derisory".
Cadbury chairman Roger Carr said the latest offer from the world's second-biggest snacks group after Nestle represented "good value for Cadbury shareholders".
"We will now work with the Kraft Foods' management to ensure the continued success and growth of the business for the benefit of our customers, consumers and employees," it added in the takeover statement.
The new firm will create a global market leader with more than 40 confectionery brands each with annual sales of more than 100 million dollars.
Once formally approved by regulators and shareholders, the takeover will see a new company eclipse US firm Mars, the world's biggest confectioner.
Investors welcomed Tuesday's news, sending Cadbury's share price 3.59 percent higher to close at 836.5 pence on London's benchmark FTSE 100 index, which rose by one third of a percent.
Kraft chief executive Irene Rosenfeld said her company's bid "represents a compelling opportunity for Cadbury shareholders, providing both immediate value certainty and upside potential in the combined company".
Kraft added that a tie-up provides "the potential for meaningful cost savings". Under the deal, Kraft will pay 500 pence in cash and 0.1874 new Kraft Foods shares per Cadbury share.
The takeover will end almost 200 years of history and independence for Cadbury -- a colourful maker of chocolate bar brands including Crunchie and Flake, as well as Halls throat sweets and Trident chewing gum.
Quaker John Cadbury launched the company in the early 19th Century, selling hot chocolate drinks as an alternative to alcohol.
Markets were meanwhile waiting to see if US chocolate maker Hershey would table its own offer for Cadbury. The Wall Street Journal last Friday reported that Hershey planned to bid at least 17.9 billion dollars this week.
Cadbury's Dairy Milk is meanwhile the most popular chocolate bar in Britain -- and the company sells more than 250 million bars every year in 33 countries around the world.
Kraft's well-known snack products include Dairylea cheese, Milka and Toblerone chocolate and Oreo cookies.



Related Article: Cadbury Rejects Krafts Takeover Offer


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