Sales boost for Cadbury

Cadbury

Cadbury, the UK confectioner has received a sales boost as it reports higher than expected sales for the third quarter of the year.

The news of Cadbury's success in the third quarter, will put pressure on US-based Kraft who made a GBP£10.2 billion takeover at the beginning of September, only to have it rejected by Cadbury, who said it was "an unappealing prospect."

The UK's Takeover Panel Kraft have been given until 9 November to make a formal offer for Cadbury, or "announce that it does not intend to make an offer."

Cadbury investors supported the board's decisions to reject Kraft's indicative offer, and want the US food group to return with an offer that values Cadbury at about 850p per share. Kraft's original approach was worth 745p per Cadbury share. They also want Kraft to increase the cash portion of its offer to about 50 percent. Only 40 percent of Kraft's initial offer was in cash.

Cadbury forecast

Cadbury also raised its forecast for revenue this year to "around the middle" of its previous guidance of 4-6 percent growth.

Cadbury said sales rose 7 percent in the quarter from the prior year, excluding the impact of currency fluctuations.

Cadbury beat expectations, in which analysts had been expected growth of about 4 percent.

Sales in the UK and the Republic of Ireland rose by 10 percent, while candy and gum sales increased due to higher demand in North America and continental Europe.

"We have great momentum in our business and our confectionery strategy continues to yield benefits beyond expectations," said Cadbury chief executive Todd Stitzer.

Kraft

The increase in Cadbury's share price to 805 pence today due to their profits has raised speculation that Kraft will come back with a higher offer.

If it does not make an offer, Kraft will be blocked from making a bid for Cadbury for six months.

As well as Dairy Milk, Cadbury also owns the Green & Black's chocolate brand, Halls lozenges, Trident and Dentyne gum brands and liquorice allsorts maker Bassett's. It spun off its drinks division as a separate business last year.

Kraft's brands include Kenco and Maxwell House coffee, Oreo biscuits, Jacobs, Terry's Chocolate Orange and Toblerone, as well as cheese products such as Philadelphia and Dairylea.

Kraft are set to reveal their profits on 3 November, according to The Times.

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