Kraft will have to raise offer, says investor

A major shareholder in Dairy Milk maker Cadbury yesterday said US food giant Kraft would have to pay more to succeed in its hostile takeover bid.
By The Newsroom
Published 15th Jan 2010, 21:55 BST
Updated 15th Jan 2010, 21:55 BST

The warning from Legal & General Investment Management (LGIM) comes after efforts this week by Kraft chief executive Irene Rosenfeld to win institutional support for the takeover, currently worth 10.5bn.

But LGIM, which owns more than 5 per cent of Cadbury's shares, said: "Our position on Cadbury is unchanged; we continue to believe that the current Kraft bid does not reflect the long term value offered by the company on a standalone basis."

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Kraft – whose products range from Oreos cookies to Toblerone chocolate – has so far increased the cash portion of its offer without raising the overall bid, but has until January 19 to sweeten the deal.

The firm is under pressure not to over-pay for Cadbury from its biggest investor, billionaire Warren Buffett, who owns around 10 per cent of the company through his Berkshire Hathaway investment firm.

Cadbury's shares are currently trading well above the value of the US firm's offer – a sign that markets expect an increased bid.

The company set out its case for independence on Thursday with detailed trading figures on an "outstanding" 2009.

It again urged shareholders to shun US food giant Kraft's "derisory" hostile bid as it reported good growth across its chocolate, sweets and gum divisions despite "mixed" trading conditions.

Related topics:Cadbury