New York: British confectionery major Cadbury has termed the unsolicited proposal of Kraft Foods as "an unappealing prospect" and added that it "is unattractive and fundamentally undervalues Cadbury".
"Under your proposal, Cadbury would be absorbed into Kraft’s low growth, conglomerate business model, an unappealing prospect which contrasts sharply with our strategy to be a pure play confectionery company," Cadbury Plc Chairman Roger Carr said in a letter to Kraft Foods Chief Executive Officer Irene Rosenfeld.
Earlier on September 7, the board of directors of Cadbury had rejected the proposed buyout offer made by Kraft Foods Inc for 10.2 billion pounds on grounds that it is unattractive and fundamentally undervalues Cadbury.
Kraft Foods proposed to takeover Cadbury for 300 pence in cash and 0.2589 new Kraft Foods shares per Cadbury share. This values each Cadbury share at 745 pence, valuing the firm at 10.2 billion pounds.
"Your proposal fundamentally fails to reflect the current
value of Cadbury as a standalone business, its growth
prospects and the potential synergies of a combined entity,"
Carr added.
Saying the Kraft Foods proposal did not give proper value
for Cadbury's shareholders Carr added, "Your proposal is for
Cadbury shareholders to exchange shares in a pure-play
confectionery business for cash and shares in Kraft, a company
with a considerably less focused business mix and historically
lower growth.”
"In addition, the proposal is of uncertain value for
Cadbury shareholders as underlined by the movement in the
Kraft share price since your announcement," he added.
Illinois-based Kraft Foods has brands like Terry's,
Milka, Oreo, Ritz and LU biscuits and acobs coffees in its
kitty.
However, Kraft Foods in a statement had said it is
"committed to working towards a recommended transaction and to
maintaining a constructive dialogue and is announcing this
proposal as a means to encourage and further that process."
Bureau Report
First Published: Sunday, September 13, 2009, 15:45