Kraft Foods bid for Cadbury in trouble
When Kraft Foods made an unofficial and informal approach to Cadbury some weeks ago with an indicative takeover offer which equated to £7.45 a share there was optimism of a potential bid battle and higher price. However, on deadline day, Kraft Foods has come forward with a formal offer on the exact terms of the initial indication that the fact that Kraft Foods shares have fallen over the last few weeks has reduced the bid price to around £7.09 a share. So what next?
Unless there is a significant increase in the Kraft Foods share price or indeed Kraft Foods comes back with an agreed offer or a higher offer you have to say that the odds-on Cadbury remaining independent are higher than the odds on the company being taken over. However, so much can change in such little time in the UK stock market and this is a saga which will go on and on for some time yet and may even attract the interest of third-party bidders who are yet to show their hand.
The market may be disappointed by the formal Kraft Foods offer but this is just a marker at the moment and the company will have the opportunity to increase its bid under UK takeover regulations.
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