Kraft raises cash offer for Cadbury with sale of pizza unit to Nestle
06 Jan 2010
Kraft Foods, the world's second-largest food company after Nestle yesterday sweetened its hostile bid for Cadbury by raising the cash component of its $16.7-billion hostile offer, within hours of striking a deal with Nestle to sell its profitable pizza business for $3.7 billion. (See: Kraft's $3.7-billion sale of pizza unit to Nestle may fund Cadbury acquisition)
With Nestle saying that it is not interested in a counter bid for Cadbury and other smaller contenders like US-based confectioner Hershey and Italian chocolatier Ferrero still to stir the chocolate takeover pot, Kraft has quietly raised the cash portion of the offer by 60 pence a share, but has kept overall size of the offer unchanged.
In a statement, the Northfield, Illinois-based Kraft said, "Kraft Foods is doing this because of the desire expressed by some Cadbury security holders to have a greater proportion of the offer in cash."
Warren Buffett, the biggest investor in Kraft, holding 9.4 per cent stock, had warned Kraft in September not to overbid for Cadbury, (See: Warren Buffett warns Kraft not to overbid for Cadbury) the company keeping in mind of that warning, said today that some of its own shareholders had asked it be "more sparing in its use of undervalued Kraft Foods shares" in its bid.
The sweetened Kraft offer will give Cadbury shareholder more cash in favour of some of the new entitlement of Kraft shares.
With the addition of 60 pence to its original offer, Kraft would be shelling out nearly $1.3 billion, taking the total bid cost to $20 billion.
