Kraft wins bid for Cadbury, ending long battle

NEW YORK (AFP) - – Kraft Foods sealed a deal for Cadbury as the famed British chocolate maker accepted a sweetened bid worth some 19 billion dollars creating a world leader in confections.
Ending a bruising months-long hostile takeover battle, Cadbury's board agreed to an improved offer valuing the British group at 11.5 billion pounds (18.9 billion dollars), or 840 pence per share, the companies said in a statement.
Under the agreement, Cadbury shareholders will also receive 10 pence per share via a special dividend, lifting Kraft's offer to 11.9 billion pounds (19.5 billion dollars).
The deal would make US-based Kraft, the world's second-biggest food company, one of the biggest global players in chocolate and confections, giving the US group the brands of Dairy Milk and Creme Egg to go along with Kraft's Toblerone, Milka, Suchard and Cote d'Or, among others.
Analyst Ildiko Szalai at Euromonitor International said the deal fits into Kraft's strategy of becoming a "global powerhouse in snacks, confectionery and quick meals."
"With this acquisition Kraft will gain a strong value share and leading position in many core emerging markets in Latin America, the Middle East and Africa and Asia-Pacific, such as India," the analyst said.
The research firm Dealogic said the takeover was the seventh biggest cross-border merger of all time by value and sixth largest in the food sector.
But the plan has left a bitter taste in the mouths of Britons over the loss of the 186-year-old iconic brand, with the potential for job losses as well.
British Prime Minister Gordon Brown, whose Labour Party is widely tipped to lose an upcoming general election, said the government was "determined" to help save jobs at Cadbury.
Britain's biggest union, Unite, warned that Kraft would be saddled with huge debts following the takeover, putting at risk 7,000 Cadbury posts and 20,000 jobs at the company's subcontractors.
Cadbury, which began as a small grocer's shop in Birmingham, central England, in 1824, has grown into a global operation spanning 60 countries with 45,000 employees.
London-listed Cadbury, led by chief executive Todd Stitzer -- an American -- repeatedly rejected Kraft since an initial approach in September, arguing that its previous cash-and-shares offer worth 10.5 billion pounds was "derisory."
But Cadbury chairman Roger Carr said the latest offer represented "good value for Cadbury shareholders."
The new firm will create a global market leader with more than 40 confectionery brands each with annual sales of more than 100 million dollars.
Facts about Kraft Foods
Once formally approved by regulators and Cadbury shareholders, the takeover will see a new company eclipse privately held US firm Mars, the world's biggest confectioner.
Investors welcomed Tuesday's news, sending Cadbury's US-listed shares up 6.14 percent to 55.09 dollars. Kraft shares fell 0.57 percent to 29.41 dollars.
Douglas McIntyre at 24/7 Wall Street said the extra cash Kraft agreed to put in to sweeten the pot ended the opposition from Cadbury.
"That was all it took to close the deal -- a rich offer made and accepted," he said.
"It was never about the strategic fit that Cadbury's board flaunted as a reason to stay independent. It was never about Cadbury's rosy forecasts or Krafts less robust picture of the future."
Force behind Kraft-Cadbury is powerful woman
Kraft chief executive Irene Rosenfeld said her company's bid "represents a compelling opportunity for Cadbury shareholders, providing both immediate value certainty and upside potential in the combined company".
Kraft, which traces its history to 1903 when JL Kraft started selling cheese from a horse-drawn wagon, said the tie-up provides "the potential for meaningful cost savings."
Markets meanwhile were waiting to see if US chocolate maker Hershey would make its own offer for Cadbury. The Wall Street Journal has reported that Hershey planned to bid at least 17.9 billion dollars this week.
However, Jefferies International analyst Simon Marshall-Lockyer said the chances of a successful counter-bid now appeared remote.
British authorities said that if Hershey or Italy's Ferrero want to make an offer they must do so before the London market opens on January 25