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    Cadbury Rejects Kraft Takeover Bid

    After rejecting a $16.7 billion acquisition offer from Kraft Foods on Monday, Cadbury must set out a clear growth strategy to justify its decision, according to a British retail consultancy that is following the company’s actions.

    By Don Longo, Convenience Store News

    After rejecting a $16.7 billion acquisition offer from Kraft Foods on Monday, Cadbury must set out a clear growth strategy to justify its decision, according to a British retail consultancy that is following the company’s actions.

    The hostile takeover bid was almost immediately rejected by Cadbury as “fundamentally inadequate,” although Kraft CEO Irene Rosenfeld appeared open to raising the offer, according to press reports, which also suggest other candy manufacturers Nestlé and Hershey may launch rival bids for the British confectionery firm.

    Verdict Consulting, based in London, said it viewed Kraft’s offer as representing “full and fair” value for Cadbury, as well as significantly above the current share price and “indeed, a way above the value of the company since it spun off its drinks division last year.”

    Kraft said that the acquisition would create “a global powerhouse in snacks, confectionery and quick meals,” and would save the company more than $600 million in marketing and distribution costs.

    According to Verdict’s consulting director, Neil Saunders, the logic of the deal is compelling, as it would allow the combined entity to compete more effectively, especially against Nestlé. “The brand portfolios of the two groups complement each other perfectly with minimal overlap,” said Saunders, who added that in rejecting the Kraft bid Cadbury must now set out clear reasons for the rejection and indicate how it intends to grow over the next five years.

    - Nielsen Business Media

    By Don Longo, Convenience Store News
    • About Don Longo Don Longo is editorial director of EnsembleIQ's Convenience Store News, Convenience Store News for the Single Store Owner and Hispanic Retail 360 media brands. He has covered retailing for more than 30 years as a reporter, editor and publisher. Previously, he spearheaded the editorial efforts at a variety of business publications focused on mass, drug, grocery and specialty store retailing. Convenience Store News won American Business Media’s Jesse H. Neal Award for Best Issue of the Year in 2008 and 2012. Longo has won numerous other editorial awards over his career and is frequently quoted in the national and local news media on the subjects of retailing and consumer trends.

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