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Kraft Foods disappoints with results

Last night saw US food giant Kraft Foods announce disappointing third-quarter results which many had hoped would be the springboard for a takeover of Cadbury. All eyes are on the US market this afternoon to see how investors react to the disappointing news because a reduction in the share price of Kraft Foods would directly affect the company's ability to afford the £10 billion plus acquisition of Cadbury.

While Cadbury shares were down slightly in early trade, on concerns that Kraft Foods may well walk away, there is still hope of a bid around £8 or £8.50 a share although nothing is guaranteed at this moment in time. Kraft Foods yesterday issued a statement suggesting it would be "disciplined" regarding an official approach to Cadbury with experts believing the company does not want to impact upon its investment-grade credit rating or overpay for the business.

On a positive note for Cadbury shareholders it was confirmed that Kraft Foods has a $9 billion credit agreement in place which many believe could be used to fund the cash element of a shares and cash takeover offer. Whatever happens over the next few days there is no doubt that rumours and counter rumours will emerge from the marketplace until we hear definitive news on the potential takeover.

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