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Can Kraft Foods afford a higher offer for Cadburys?

UK food giant Kraft Foods is still very interested in taking over UK chocolate manufacturer Cadbury's with a £12.3 billion offer still on the table but yet to be presented to shareholders. The offer is worth around £7.45 a share although the price of Cadbury shares is currently above this level with many people believe in a higher offer will come in due course, either from Kraft Foods or a third party. So will Kraft Foods increase its offer?



A number of analysts have looked at the balance sheet of Kraft Foods and believe that the company could increase its current offer by 20% which would value the Cadburys in the region of £8.50-£9.00 per share. Analysts believe that the suggested increase in the offer price would be a ceiling affordable to Kraft Foods at this moment in time without potentially impacting upon the company's credit rating. So who will win the battle?



While there are still hopes of a third party entering the fray and pushing the bid price for Cadburys higher, the longer the situation goes on without a counter offer or third-party confirming an interest in Cadburys, the stronger the position of Kraft Foods. It looks as Cadburys is in play and Kraft Foods is determined to take over the company, which as we covered recently, would appear to be a perfect geographical fit for the US giant.

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