A U.S. shareholder has filed a shareholder derivative lawsuit against the Cadbury board of directors. The shareholder says that the board of directors is wrong to be fighting off Kraft's hostile takeover bid, and should be negotiating with Kraft to sell the company. The Cadbury board says the lawsuit is without merit, and some think the shareholder is a straw man for Kraft.
Susan Dougherty, the investor, yesterday asked a federal judge in Newark, New Jersey, to order the board to fulfill its duties to the company and shareholders by engaging in good-faith negotiations with Kraft. Cadbury is fighting a 10.4 billion- pound ($16.8 billion) hostile bid from Kraft.
"Rather than negotiate with Kraft in good faith in order to maximize value in a possible going-private transaction, the board has breached its fiduciary duty by spurning Kraft's offer to acquire the company for a significant premium," according to Dougherty's amended complaint. "Cadbury's purported justification for such conduct is untenable."
Cadbury Plc Chief Executive Officer Todd Stitzer told investors in New York last week that Hershey Co. could expect higher earnings per share if it bought Cadbury, while a Kraft deal may present more cost-cutting opportunities, according to people who heard him. Hershey and Ferrero SpA have said they are reviewing options for Cadbury. Neither has made an offer.
Kraft's offer for Cadbury is low and unless Hershey steps up to the plate with a better offer, will become the standing bid that must be considered by all shareholders.
