U.S. chocolate maker Hershey Co. (HSY) said Friday it would not counterbid to the rival Kraft Foods Inc.'s (KFT) offer to buy U.K.-based confectioner Cadbury plc (CBY, CBRY.L).
The UK Takeover panel had set a deadline for Hershey to make an final offer or to announce that it does not intend to make an offer to acquire Cadbury by January 25.
This move by Hershey comes after Kraft had sealed a deal with Cadbury to acquire Cadbury's shares for 840 pence per share and a 10 pence special dividend which was already offered to shareholders. However, billionaire investor and Kraft's single largest shareholder, Warren Buffett commenting on the increased offer noted that Kraft was paying a higher price to acquire Cadbury.
The sweetened offer, which was confirmed by Kraft on January 19, values Cadbury at around US$19.2 billion. Reports said that Cadbury's shareholders will get 500 pence in cash and 0.1874 Kraft shares for each Cadbury share they hold.
Italian chocolate maker Ferrero SpA was also in talks with Hershey to jointly acquire Cadbury. On November 18, Hershey had announced that it was reviewing its options with respect to a potential offer for Cadbury. Ferrero in early January reportedly had ended talks with Hershey on the possibility of launching a joint bid for Cadbury.
Hershey in its statement pursuant to Rule 2.8 of the City Code on Takeovers and Mergers said that it reserves the right to participate or announce an offer to buy Cadbury in case the offer from Kraft fails.
Kraft in late August made an offer of 300 pence cash and 0.2589 new Kraft shares for each Cadbury share which valued Cadbury more than $16 billion which was rejected by the chocolate maker. Later, the company revised the offer and it was accepted by the Cadbury board.
HSY is currently trading at $36.57, up $0.38 or 1.05% on the NYSE. CBY is currently trading at $53.63, down $0.20 or 0.37% and KFT is currently trading at $28.06, down $0.18 or 0.64% both on the NYSE. CBRY closed unchanged from its previous day closing price of 833 pence on the LSE.
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