Cadbury accepts Kraft takeover bid

British confectioner agrees to "improved" $19.5bn offer from US food conglomerate.

    Cadbury had rejected its American rival's previous
    takeover offer as 'derisory' [EPA]

    Irene Rosenfeld, the chief executive officer of Kraft, said on Tuesday that the deal represented "a compelling opportunity for Cadbury shareholders".

    Job fears

    There have been fears about job losses, with UK trade union Unite warning that Kraft would be saddled with huge debts, leading them to axe 7,000 posts at Cadbury and 20,000 at the company's sub-contractors.

    "It certainly is a better deal than having it broken up by another company," Charlie Parker, a financial analyst at City Wire, told Al Jazeera. "Whether it's a better deal than leaving it independent, is much, much, much less clear.

    "Cadbury was a good business; it wasn't a business in trouble. Its shareholders were happy with its performance and its cost cutting and its position in industry. So I don't think there were jobs under threat before this deal.

    "I think probably a lot of people will think they're more under threat now, because, after all, Kraft has paid a heavy price for this company. Its own shareholders are going to be saying you need to cut costs to prove this was a good deal."

    British opposition

    Roger Carr, Cadbury's chairman, said the new offer "represents good value for Cadbury shareholders" and said the company was "pleased with the commitment that Kraft Foods has made to our heritage, values and people throughout the world".

    Kraft still has to persuade a majority of Cadbury shareholders to accept the deal, and the door remains open until Saturday for The Hershey Company, a US confectioner which has also expressed an interest in the company, to jump in with a rival bid.

    Kraft is proposing to pay 500 pence, or 820 cents, in cash and 0.1874 new Kraft Foods shares per Cadbury share. That would value each Cadbury share at 840 pence, or 1,378 cents.

    "In addition, Cadbury shareholders will be entitled to receive 10 pence per Cadbury share by way of a special dividend following the date on which the final offer becomes or is declared unconditional," the company said.

    'Biggest giveaway'

    Kraft's proposed takeover had previously encountered opposition in Britain, with protests from senior government ministers over the attempt by a huge American firm to take over a homegrown company.

    "Over the past decade we have seen the Labour government preside over the biggest giveaway in history of UK plc to foreign companies in a lot of the key areas in our economy where we have ... expertise," Parker, the City Wire financial analyst, told Al Jazeera.  

    "I think that boat has sailed. They have made the case that in a free market you simply cannot dictate who owns companies.

    "You've got to allow market forces to have their way and that's what's taking place. Now its going to claim one of the jewels in the British economy."

    SOURCE: Al Jazeera and agencies


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