Rosenfeld sticks to her guns on bid price
KRAFT’s chairman Irene Rosenfeld yesterday argued that a takeover of rival Cadbury would lead to the birth of a “global powerhouse” in snacks and confectionary and create millions of dollars in savings.
Rosenfeld said that a takeover of the Dairy Milk maker would lead to annual pre-tax cost savings of at least $625m, through synergies in manufacturing, administration and marketing.
A combination of the two consumer good giants would create a global confectionary portfolio with over 40 brands, including Oreos, Toblerone and Creme Eggs.
But Kraft came under fire yesterday for not sweetening its original proposed offer.
Kraft’s hostile bid of 300p and 0.23589 Kraft shares per Cadbury share values the British confectionary group at a lower price than when Chairman Roger Carr dismissed the proposal as an “unattractive” and “unappealing” offer from a “low growth conglomerate”.
Carr yesterday slammed Kraft’s bid as “derisory” and said: “The repetition of a proposal which is now of less value and lower than the current Cadbury share price does not make it any more attractive.”
But Kraft argued that the bid is fair and represents a 37 per cent premium to Cadbury’s price on 3 July, before the analyst community speculated on potential sector consolidation, and a 29 per cent premium to the average share price of 555p before Kraft Foods launched its takeover offer.
Analysts have said, however, that global markets have recovered since July, and prices would have naturally risen.
Panmure Gordon analyst Graham Jones said: “The world has moved on since July. And Kraft’s offer highlights it was a simply opportunistic move by Kraft to take advantage when the markets were still weak.”
Kraft has repeatedly reinforced its “financial discipline” in acquisitions and ruled out overpaying, particularly when there is no other bidder.
Rosenfeld is keen to maintain Kraft’s progressive dividend plan to appease influential shareholders, which include billionaire Warren Buffet.
Rosenfeld said: “What we can afford is not relevant. What is relevant is what Cadbury is worth and that will guide our actions going forward.”
Hargreaves Lansdown analyst Keith Bowman said: “Kraft are demonstrating that they will not be pushed into anything just because of a time frame – for now they are happy to agree to disagree on pricing.”