Kraft goes hostile with its bid for Cadbury, a British confectioner

CHOCOLATES are universally recognised as a potent means of winning over hearts. And usually a suitor who presents a bigger box of treats is thought to have a better chance of success than one who brandishes a smaller one. So the decision of Kraft Foods to launch a hostile bid for Cadbury on Monday November 9th that fails to match up to its original offer of a couple of months ago is unlikely to result in a happy union. The American company’s hand was forced by a ruling from Britain’s Takeover Panel that it must make a full bid (which it has now done, in effect restating the original offer) or walk away for at least six months.

The hostile bid, like the offer that the American food giant made at the beginning of September, offers GBP3 ($5) and around one Kraft share for every four shares of the British maker of Crunchies and Creme Eggs. The potential burden of Kraft’s purchase of Cadbury and some lacklustre results have depressed the American firm’s share price (while Cadbury unveiled quarterly numbers that were better than expected). The current offer values the deal at GBP9.8 billion compared with GBP10.2 billion when Kraft made its initial approach. …

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