Kraft Battle for Cadbury Takeover Just Beginning

Today was the deadline for Kraft Foods (KFT) to make official its bid on UK-based Cadbury (CBY), according to the UK Takeover Panel, and Kraft surprised many by failing to budge from its initial offer. In fact, because of changes in Kraft stock prices, the offer was worth less than what Kraft originally put on the table — $16.3 billion, compared with about $16.7 billion two months ago.

But this is far from the end. Kraft has 28 days to send the bid proposal to shareholders, and then 60 days to persuade shareholders to go for it. Until the last two weeks, Kraft can alter its bid, which many think is likely to happen.

“The question is does this bring Cadbury to the table to try and negotiate,” Jane Coffey of Royal London Asset Management told Bloomberg.

Cadbury chairman Roger Carr has urged shareholders to reject the bid. “Kraft’s offer does not come remotely close to reflecting the true value of our company, and involves the unattractive prospect of the absorption of Cadbury into a low growth conglomerate business model,” he said, echoing his earlier insults directed at Kraft.

The big issue is whether Cadbury can stay independent. There’s been some talk of possible last-minute offers from “white-knight bidders” like Nestle or Hershey, but none of them has yet shown any sign of jumping in the ring.

Cadbury says it doesn’t need a big company like Kraft taking it over; it’s fine on its own, thank you very much. Kraft CEO Irene Rosenfeld addressed this in her own statement, saying “We believe that our proposal offers the best immediate and long-term value for Cadbury’s shareholders and for the company itself compared with any other option currently available, including Cadbury remaining independent.”

We’ll see what the Cadbury shareholders think. A higher offer would have had a good chance of winning them over, but as it stands, things are much more uncertain.

Related Stories on BNET Food:

• Bar Raised as Kraft Cadbury Bid Deadline Approaches
• More Drama and Mixed Messages in Kraft-Cadbury Flirtation
• Cadbury Warms to Kraft Bid, Pushes for Deadline
• Cadbury Chairman Insults Kraft in Open Letter
• Cadbury Playing Hard-to-Get?

See also this BNET feature story: Irene Rosenfeld’s Crafty Pursuit of Cadbury