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British candy maker Cadbury, PLC rejected a new 9.8 billion pound (US $16.4 billion) hostile bid from Kraft Foods, Inc. yesterday, after Kraft refused to up a previous offer.
Northfield, Ill.-based Kraft’s refusal to change its cash-and-stock offer means a lower offer for Cadbury investors due to of a shift in the share prices of both companies, according to an Associated Press report. The 195-year-old Cadbury makes Dairy Milk, Britain's top-selling chocolate bar, according to the report.
Kraft argued that the newly proposed deal -- which is lower than the 10.2 billion pound offer it made in September – “represents a substantial premium to the unaffected share price of Cadbury,” according to the AP report.
“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," Kraft Foods CEO Irene Rosenfeld said in the report.
Analysts have said that Kraft needed to improve its offer to potentially win Cadbury, which also makes Halls lozenges, and Trident and Dentyne gum.
Cadbury chairman Roger Carr was quoted by the AP as saying the British company was “an exceptional standalone business” with "strong iconic brands, a sharp category focus and an enviable geographic scope.”
He added: “Kraft’s offer does not come remotely close to reflecting the true value of our company.”
Kraft made its move three hours before a deadline under British takeover law that required the buyer to make a formal offer or walk away for six months, the report said.
A merger of Kraft and Cadbury would create a company with total revenue of at least $50 billion, according to the report.
But Carr added a tie-up involved “the unattractive prospect of the absorption of Cadbury into a low-growth conglomerate business model.”