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Wed, Jan 13, 2010 - Page 10 News List

Cadbury rejects Kraft bid, reporting robust trading


Cadbury showcased robust results for last year and an upbeat outlook yesterday in its last move to rebuff US food giant Kraft Foods’ £10.5 billion (US$17 billion) hostile takeover bid.

In a final defense document, the British confectioner said Kraft’s “derisory” offer valued Cadbury lower than any comparable deal in the sector and that its standalone value had risen since the Kraft bid emerged in September.

“Our performance in 2009 was outstanding. We generated good revenue growth despite the weakest economic conditions in 80 years,” CEO Todd Stitzer said.

Kraft’s cash and share bid is currently worth 762 pence (US$12.33) a share compared with Cadbury’s closing price of 781 pence on Monday. Cadbury’s share opened down 2 pence at 779 pence on Tuesday.

Investors say a winning bid needs to be 800 pence or above. Cadbury said its underlying sales last year rose 5 percent with the second half accelerating to 6 percent.

It achieved an operating margin of 13.5 percent against a previous company forecast of 13.3 percent and said its dividend for last year would rise 10 percent.

Cadbury chairman Roger Carr has dismissed Kraft’s offer and has questioned the ability of Kraft CEO Irene Rosenfeld to raise her bid after Kraft’s top shareholder Warren Buffett warned the company not to overpay.

“Kraft’s offer is even more unattractive today than it was when Kraft made its formal offer in December … Don’t let Kraft steal your company with its derisory offer,” Carr said.

Carr and Stitzer are confident of meeting Cadbury’s longer-term targets which include annual sales growth of between 5 percent and 7 percent from this year, lifting operating margins to between 16 percent and 18 percent by 2013 and achieving double-digit dividend growth for this year and beyond.

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