Cadbury board recommends sale to Kraft

Cadbury takeover

After months of press and speculation, last night the Cadbury board recommended that the company accept an increased offer from Kraft as Hershey withdrew their interest in the chocolate-maker.

The Cadbury board will advise its shareholders to accept a new offer of 850 pence a share - valuing the company at GBP£11.7 billion.

Cadbury shareholders will also receive a dividend of 10 pence a share, BBC business editor Robert Peston states.

Cadbury's board, led by chairman Roger Carr, will announce its decision to recommend the revised 850p-a-share bid to all shareholders through a ­statement to the stock exchange this morning, according to sources close to the company.

It is believed that Kraft and its advisers approached Cadbury yesterday to propose a consensual deal at a significantly higher level than the GBP£10.5 billion it had previously indicated that it was prepared to pay to the UK company's board, the British paper The Times reports.

Discussions between the two sides were continuing late last night but it is believed Kraft has told Cadbury's board that it will pay between 840p and 850p a share and that the chocolate maker may be on the verge of caving in, ending its 186 years as an independent company.

According to Peston, the offer will consist of 500 pence in cash, with the rest made of Kraft shares, with Kraft having to borrow GBP£7 billion (US$11.5 billion) to finance the deal, the BBC report.

"Derisory"

The deal is a significant increase on earlier Kraft bids, which were flatly rejected by the Cadbury board as a "derisory" bid.

Kraft previously offered 761 pence per share, valuing the company at GBP£10.5 billion - a bid Cadbury's chairman Roger Carr said was an attempt to "buy Cadbury on the cheap."

Shareholders are now expected to agree to the takeover.

David Cumming, head of UK equities at Cadbury shareholder Standard Life, said that he would be agreeing despite hoping for a higher price.

"I won't go against the view of Cadbury's management," he told the BBC.

"Kraft are getting a good deal. It's sad that Cadbury is gone, but business is business."

In early trading on Tuesday, Cadbury shares were up 3.5 percent.

Employment

The approach by Kraft last year led to protests from unions and workers, concerned that a takeover would be likely to lead to job losses among the 40,000 Cadbury staff employed worldwide.

Kraft is likely to commit to protecting jobs at the Somerdale and Bourneville sites in the UK, according to our business editor, though staff numbers at Cadbury's head office in Uxbridge are expected to be cut.

The deal should also mean that a factory earmarked for closure at Keynsham, near Bristol, will be saved, meaning that workers at the factory should be able to breath a sigh of relief.

Related News:

Will Cadbury get taken over? |Cadbury vs Kraft |Cadbury defends decision |Hershey and Ferrero join forces for Cadbury

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