Cadbury Still Waiting on Better Offer From Kraft Foods
Cadbury stock prices have been dropping since U.S.-based Kraft said it wants to buy the company. At the time, analysts thought that Hershey and Nestle would also bid, but that never happened. Kraft made a low offer in August which was rejected. Now Kraft has until November 9 to come up with a formal offer, but it's appearing more likely that the offer won't be that great, because no one else is bidding. So people are dumping the shares in the meantime.
Cadbury dropped for a sixth straight day to 772.5 pence at 9 a.m. in London trading today. The difference between Kraft's offer, valuing the maker of Trident gum at about 726 pence a share, and Cadbury's stock price has narrowed by 44 percent from a Sept. 15 peak in the spread. Investors are less confident about a competing bid from companies such as Nestle SA or Hershey Co.
"We haven't heard anything from the other rumored protagonists," said William Hobbs, who helps manage 134 billion pounds ($220 billion) in assets, including Cadbury shares, at Barclays Wealth in London. "It would be very surprising if Kraft went for a knock-out bid when they come back if they’re not feeling any pressure from Nestle or Hershey."
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Kraft, based in Northfield, Illinois, has less than two weeks to come back with a formal offer for Cadbury after proposing a cash-and-stock takeover on Aug. 28, valued at 9.92 billion pounds based on yesterday's closing stock prices. A purchase would add Cadbury's Dairy Milk chocolate to Kraft products including Oreo cookies and Philadelphia cream cheese.
Cadbury is most likely going to be sold to somebody eventually. If Kraft decides to walk away, the chocolate company could stay independent for awhile longer.
