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Kraft gets deadline for Cadbury bid

Kraft is under pressure to make a formal takeover bid for Cadbury by November after the UK’s Takeover Panel gave it less than six weeks to put an offer on the table or walk away.

The Takeover Panel said recently that  it had set a deadline of November 9 for the US food group to come forward with a formal offer after the UK confectionery group approached it with a so-called “put up or shut up” request last week.

Kraft said it had “noted” the decision of the Takeover Panel and understood the implications of the deadline.
Cadbury’s Chairman, Roger Carr, said the confectionery company had not changed its view on Kraft, and stood by its rejection of the company’s $10.2bn ($16.3bn) indicative offer. He said: “The board is confident in Cadbury’s pure play strategy and growth prospects”.Cadbury’s shares closed 4p higher in London at 803p while Kraft’s shares had slipped 13 cents to $25.89 in New York in Wednesday trading.

The timing of Kraft’s and Cadbury’s third-quarter results could influence when Kraft formalises its offer.Cadbury is scheduled to report third-quarter earnings on October 21, while Kraft is due to report in the first week of November.

The earnings announcements will allow both companies the opportunity to stress the strengths of their businesses.Kraft predicted in August that it “will again grow both the top and bottom lines while expanding margins and improving market share” during its current fiscal year, as it enters “the home stretch” of efforts to transform its business under chief executive Irene Rosenfeld.

Meanwhile, Todd Stitzer, Cadbury chief executive, has been emphasising the company’s growth prospects in emerging markets.
Kraft is also closely watching foreign exchange rates. Recent weakness in sterling against the US dollar helps to strengthen Kraft’s negotiating position as its share price weakens.Cadbury is not expected to release a formal defence document to shareholders until it receives a formal bid. If Kraft makes a formal offer, it will have 28 days to publish offer documents. If Cadbury’s Board does not accept the offer, Cadbury would then have 14 days to publish a defense document.


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