Monday, Kraft Foods Inc. (KFT) announced that it has successfully gained control over the U.K.-based confectioner Cadbury plc (CBY,CBRY.L), pursuant to the acquisition of about 987.68 million of Cadbury Shares, representing around 71.73% of the existing issued share capital of Cadbury through its offering.
The Northfield, Illinois-based Kraft said that it has received, as of February 2, valid acceptances of a total of about 987.68 million of Cadbury Shares, representing around 71.73% of the existing issued share capital of Cadbury.
Once more than 75% shares of Cadbury are received, Kraft Foods plans to procure that Cadbury will apply for the cancellation of the listing of Cadbury shares on the official list and the trading on the London Stock Exchange for listed securities. Kraft also intends to procure that Cadbury will apply for the delisting of Cadbury ADSs from the NYSE and that Cadbury terminates its ADS program and the Deposit Agreement. Kraft also proposed that Cadbury will be re-registered as a private company, after the shares are delisted.
The company said, "As such, all of the conditions of the recommended Final Offer for Cadbury have been satisfied or waived, allowing Cadbury to become part of Kraft Foods."
Kraft said the final offer remains open, encouraging Cadbury security holders who have not yet accepted the offer to do so without delay.
In the event of acquiring 90% of Cadbury's shares, Kraft also plans to acquire compulsorily any outstanding Cadbury Shares, including any Cadbury Shares represented by Cadbury ADSs.
Irene Rosenfeld, Chairman and CEO of Kraft commented, "The combination of Kraft Foods and Cadbury creates a global powerhouse in snacks, confectionery and quick meals. Together we have impressive global reach and an unrivalled portfolio of iconic brands, with tremendous growth potential. I warmly welcome Cadbury employees into the Kraft Foods family and look forward to meeting many of them in the days and weeks ahead. This combined company has a phenomenal future, and I firmly believe it will deliver outstanding returns to our shareholders."
On January 19, Kraft issued details of its offer to acquire all the outstanding shares of Cadbury. Kraft, based on the closing share price of USD 29.58 per Kraft Foods Share on January 15, 2010, valued its offer at 840 pence per Cadbury Share and GBP 33.60 per Cadbury ADS. This excluded the special dividend of 10 pence per Cadbury Share which would be paid following the date on which the Final Offer becomes or is declared unconditional.
On January 22, while providing details related to mix and match facility, Kraft said excluding the special dividend of 10 pence per Cadbury share, based on January 21 closing price of US$ 28.24 per Kraft Foods share, Kraft valued its offer at 827 pence per Cadbury Share and GBP 33.08 per Cadbury ADS.
In addition, the company had said Cadbury shareholders who choose to get additional cash for their Cadbury share using the Mix and Match facility will receive 799 pence per share and GBP 31.95 per Cadbury ADS. The company noted that the cash price excludes a special dividend of 10 pence per Cadbury share. The company reached the value of 799 pence keeping December 1 closing price of US$ 26.50 Kraft's share as reference share price.
Kraft had originally offered to acquire Cadbury in August for 300 pence cash and 0.2589 new Kraft shares for each Cadbury share, valued at about GBP 10.2 billion in cash and stock, which Cadbury rejected in September. On November 9, Kraft made a formal unsolicited offer to acquire Cadbury, but the maker of Dairymilk chocolates rejected what it called a 'derisory offer' and encouraged shareholders to turn down the bid. Cadbury also noted that it is worse than the previous offer due to the fall in the Kraft share price since September as well as the weaker dollar versus the sterling.
Cadbury chairman Roger Carr had earlier stated that he is likely to prefer a tie-up with Hershey, a pure confectionery business, rather than being subsumed into Kraft. However, Carr was to reject any bid from Hershey or Kraft unless it tops 800 pence per share.
On January 12, Cadbury had once again rejected the "wholly inadequate offer" from Kraft, following its "outstanding" financial performance in 2009 as well as the company's expectation of a strong business momentum in 2010. The company also said its standalone value had risen further since Kraft's approach on September 4. Also, the offer price had valued Cadbury only 12 times of 2009 EBITDA and was lower than any comparable transaction in the sector.
However, on January 18, the media reported that the acquisition had become friendly when Kraft had sweetened its offer to about $19 billion or GBP 11.7 billion, in cash and stock.
KFT is currently trading at $28.60, up $0.54 or 1.92% on a volume of 12.57 million shares, and CBY is trading at $53.93, up $0.49 or 0.92% on a volume of 165 thousand shares. On the LSE, CBRY.L closed at 840.50 pence, up 8.50 pence on a volume of about 13 million shares.
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