September 7, 2009

Cadbury rejects Kraft merger offer

British chocolate maker Cadbury PLC Monday said it rejected a $16.7 billion merger offer from U.S. foods manufacturer Kraft Foods Inc.

A statement released by Cadbury confirmed reports Kraft, of Northfield, Ill., had made the offer but its board of directors had rejected it, saying it fundamentally undervalues the venerable candymaker and it remains confident in its standalone strategy and growth prospects as a result of its strong brands, unique category and geographic scope.

Kraft's offer valued Cadbury shares at $28.10 and said a merger would build on Kraft Foods' position as a global powerhouse in snacks, confectionery and quick meals with a rich portfolio of iconic brands. Its proposal is a mix and match facility under which Cadbury shareholders could elect, subject to availability, to vary the proportions in which they would receive cash and new Kraft Foods shares, the U.S. company said in its own statement.

Kraft claimed the deal would allow Cadbury to keep its factory near Bristol, England, open, where 500 jobs are set to be eliminated next year, and to roll back some of the cost-cutting measures carried out at its flagship Bournville, England, site, The Times of London reported.