Cadbury now comes at a higher price

Sunday, 17 January 2010

It’s looking increasingly like the time is running out for Cadbury after a formidable defence against the bidding from Kraft… or is it? Now with the increasing interest from Hershey and Fererro, Kraft’s current offer at 771 pence is far cry from the 830 pence level that Cadbury is expected to go accept. If Kraft place a final offer at 820 and it’s rejected, it therefore leaves the way open for a counter bid from Hershey potentially at 840 pence and then it would be in the bag for the lucky new owners. If they can afford it that is. Hershey already makes Cadbury-branded chocolate in the US under licence, but can’t afford to pay 840p. It will struggle at 820p, but at the lower price the stakes are too high not to bid. Whoever loses will be therefore not be the world’s biggest food and confectionery group and one that will remain that size for some time to come. The rewards a great. Hershey’s best chances are for a lower offer to be rejected. Ironically the surge on Cadbury has proven that Cadbury, with its formidable and well though out defence has, increased the share price. During the bidding period Cadbury has now won many more investors. Cadbury was not a broken company and in trouble when Kraft came along and it is now in a stronger position than before. Cadbury now will not come on the cheap. Kraft it appears, will not pay what it rates a too high price, that price is now higher and is a price that other city investors appear to pay. This is one great battle of strategy and it appears so far that Cadbury, even though in the weaker position, could have an upper hand. Cadbury appear to be resilient in the ongoing battles.

 

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