The UK-Based Cadbury Schweppes has justified its rejection of the unsolicited takeover offer from Kraft Foods saying on Saturday that its rival's low-growth, conglomerate business model was unappealingas it differs from Cadbury's strategy of being a pure play confectionery company.
In a letter to Kraft chief executive officer, Irene Rosenfeld and posted on the company's web site on Saturday, Roger Carr, who chairs the world's second- biggest confectionery company as well as the UK energy giant Centrica, said that Kraft's $16.7-billion unsolicited takeover offer, ''fundamentally fails to reflect the current value of Cadbury as a standalone business.''
Kraft Foods, the largest food and beverage company in the US and the second largest in the world after Nestlé, said on 7 August that the UK confectioner Cadbury had rejected its $16.7-billion (£10.2 billion) acquisition offer to create ''a global powerhouse in snacks, confectionery and quick meals.'' (See: Cadbury rejects Kraft Foods' $16.7 billion merger offer)
On 7 September, Kraft officially wrote a letter to the Cadbury board and took its unsolicited takeover proposal public in order to ramp up pressure on the UK confectioner by trting to get support from Cadbury shareholders, after the UK confectioner's board remained silent following a 28 August meeting held at Centica's office in London, where Rosenfeld had outlined the takeover proposal to Carr.
Even though the Kraft proposal was made public on Labour Day - a holiday in the US - it triggered fierce debate across all corporate boardrooms in the UK and sent the London-based FTSE 100 soaring to its highest level ever in 2009, with Cadbury shares jumping 38 per cent to 783 pence against the 745 pence bid offer from Kraft.
The Cadbury board was both rattled and furious with Kraft for going public with the news of its offer, since they were still talking to their advisors and its chief executive, Todd Stitzer, was discussing Kraft's bid at investor meetings in the US with 40 of Cadbury's top American shareholders.