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Kraft Foods must make offer for Cadbury by 9 November

The Takeover Panel has today ruled that Kraft Foods, which has introduced an indicative takeover to the Cadbury board of directors, must either make a formal offer within 40 days or walk away for six months. As a consequence, the company will have to "put up or shut up" between now and 9 November as the uncertainty of the informal offer has created havoc in the marketplace and with Cadbury directors.

To be honest this is a fair resolution to an appeal made by Cadbury directors who are in effect defending an offer which has not been made from a company which may or may not be able to raise the finance required. Even though the initial indicative offer of £7.45 is well below the current share price of around £8 there is a feeling that Kraft Foods is serious about the acquisition of Cadbury and indeed the two companies would make the "perfect fit".

Now that Kraft Foods has effectively shown its hand it would seem inconceivable that a formal offer will not be forthcoming within the next 40 days because the company has spent significant funds on this strategy to date. Murmurings earlier in the week that the company may well struggle to raise the finance required appear to be well short of the mark as a number of banks have stepped forward with proposals. We await further developments in due course.

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