Cadbury not sweet on Kraft takeover

Cadbury's Dairy Milk

TEXT OF INTERVIEW

Bill Radke: With news of a massive takeover bid this morning. The American food behemoth Kraft, which makes Oreos and Cheez Whiz and Kool-Aid, has offered nearly $17 billion for the huge British confectioner, Cadbury. And Cadbury has said, "No thank you."

Europe correspondent Stephan Beard joins us live from London -- good morning.

Stephen Beard: Good morning, Bill.

Radke: What kind of deal is Kraft pitching here?

Beard: Kraft is offering a mixture of cash and shares for Cadbury, which looks pretty tempting on the face of it -- it values Cadbury at about 31 percent above the stock market value of the company on Friday. And Kraft says this makes very good sense for Cadbury: it will enable the company to compete globally, especially in emerging markets. And, Kraft says, the deal would prevent some of the job losses in the U.K. that Cadbury has been contemplating. So some of the British workforce are going to find this deal rather appealing.

Radke: And yet Cadbury has declined. Why is that?

Beard: Well, all we know is that the board has emphatically rejected the bid when it was put to it last week. This is a very proud company, proud of its heritage. It was created in the 1820's by a Quaker family. It's proud of its independence and recent growth -- I mean with Mars, it's now one of the two biggest confectioners in the world. And financially, it seems to be in fairly good shape, too. So Kraft has a fight on its hands.

Radke: And how are the markets reacting to this?

Beard: Well, the markets seem very happy with it, and they seem to be expecting a rival bid. Cadbury's shares jumped this morning above the bid price, and shares in other confectionary companies moved higher, too, on expectations of further bid activity in this sector -- a sector which analysts have been saying for some time is ripe for consolidation.

Radke: Marketplace's Stephen Beard. Thank you so much.

Beard: OK, Bill.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.

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