Cadbury: Dismisses Bid From Kraft Foods

Uxbridge / UK. (cb) The Board of Cadbury PLC published a shareholder circular in response to the offer posted by Kraft Foods Inc. on 04 December. As stated in Cadbury´s announcement on 09 November, the Board unanimously rejects Kraft´s wholly inadequate offer as it substantially undervalues Cadbury and recommends shareholders reject the Offer.

The Board is committed to maximising shareholder value and believes that this is best achieved through the strong continuing performance of an independent Cadbury.

• Cadbury is a business with exceptional growth opportunities, reflecting its strong position as a unique pure-play confectionery business, with iconic brands and leading positions in the attractive confectionery market.
• Cadbury has also built the leading position in emerging markets, which has driven significant revenue growth and which we expect to drive strong growth in the future.
• The first two years of Vision into Action have transformed Cadbury into a financially stronger, more competitive business which has delivered ahead of our plan. Kraft´s offer fails to recognise the value of Cadbury´s performance to date and the benefits of completing the Vision into Action plan set out in June 2007.
• Following a mid-term review of Cadbury´s plan, started in Spring 2009, the company is today setting out upgraded targets for the next four years which are expected to deliver significant additional value. New long-term targets include:
  • Organic revenue growth of five to seven percent per annum
  • Improved margins of 16 to 18 percent by 2013
  • 80 to 90 percent operating cash conversion from 2010
  • Double digit growth in dividends per share from 2010 onwards

In addition to the announcement of its new Vision into Action targets, Cadbury has provided an update on current trading and guidance for 2009 (see the company´s press release).

Roger Carr, Chairman of Cadbury: «Cadbury is an exceptional business worth much more than the offer put forward by Kraft. It is clear to all that Cadbury is a particularly attractive asset in the sector with iconic brands, a sharp category focus and an enviable geographic footprint.

We believe our shareholders should have the opportunity to reap the full rewards of the investment that has already been made in creating a platform for future improved revenue growth, enhanced profitability and high cash returns. Cadbury will have delivered average revenue growth of 6% per annum and improved margins by 350 bps for the period 2007 to 2009. We are committed to the achievement of the higher Vision into Action targets and the creation of significant value – benefits that should fully accrue to our shareholders.

“Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model. Do not let Kraft steal your company with its derisory offer».

Info: Cadbury Issues Defence Document – Announces higher Vision into Action targets for 2010 to 2013 – Confirms Q4 trading in line with expectations – Reconfirms guidance for 2009 (PDF, four pages, 59 KB).