Kraft Foods US shareholders launch lawsuit
A lawsuit has been launched in America by a corporate shareholder in Kraft Foods suggesting that the Cadbury board of directors have not acted in the best interest of Cadbury shareholders and "may lose out massively" if the merger is rejected outright. So where does this leave the Cadbury board of directors?
The first thing to say is that UK mergers and acquisitions are regulated by the UK takeover panel and not their US counterparts. Secondly, as Cadbury has rightly pointed out today, Kraft Foods has not launched any formal bid for the company having only forwarded an indicative offer to the Cadbury board of directors for their consideration. So what next?
In many cases this US lawsuit is something of a red herring because ultimately it is yet another attempt to place more pressure on the Cadbury board of directors who themselves will have the best legal brains in the UK advising them. In simple terms, it is impossible to turn down an offer which has not actually being formally presented and funded by the third party in question.
There is still a long way to go with regards to the potential merger of Cadbury and Kraft Foods although the "put up or shut up" notice issued by the takeover panel should now focus the minds of the two groups and hopefully get them around the discussion table in the short to medium term.
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