The FINANCIAL — Italy's Ferrero formally ruled out a rival bid for Cadbury Plc paving the way for Kraft Foods Inc.
Ferrero International SA, the Luxembourg-based holding company of the Ferrero family, said in a statement on January 25 that it doesn’t intend to make an offer, according to Business Week. The announcement comes three days after Hershey Co. abandoned a plan to bid for Cadbury.
The U.K. maker of Dairy Milk chocolate on Jan. 19 agreed to an improved 11.9 billion-pound ($19.2 billion) offer from Northfield, Illinois-based Kraft, ending more than four months of resistance and creating the world’s largest confectioner, the same source reports. Ferrero said on Nov. 18 it was in the early stages of evaluating options in respect to Cadbury. Today’s statement was responding to a U.K. Takeover Panel request to clarify its position.
"Further to its announcement of November 18, 2009, Ferrero International SA confirms that it does not intend to make an offer for Cadbury," the Italian group said in a statement on Monday, Reuters wrote.
Potential bidders Hershey and Ferrero, which had both said on Nov. 18 they were considering bids for Cadbury, were given until 0700 GMT on Jan. 25 either to come up with a fully financed bid or withdraw, according to the same source. Shareholders in Cadbury have until 1300 GMT on Feb. 2 to accept the Kraft offer, and with the deal already recommended by the Cadbury board and no obvious rival bidders seen entering the battle, analysts expect the Kraft takeover to go through.
Ferrero decided not to take part in a bid for Cadbury because it would have involved too much debt and required job cuts, Il Sole 24 Ore reported on Jan. 14, Business Week informs. The Italian chocolate maker plans to introduce “fresh” products using new technology, which may help it increase its presence in regions including Asia and South America without making acquisitions, La Stampa reported separately the same day.
Kraft, the maker of Oreo cookies, now has until 2 February to convince Cadbury shareholders to accept its offer, BBC reports. If Kraft's takeover of Cadbury goes ahead, the combination will create the world's largest confectionery company. British MPs and trade unions are concerned about the job losses the deal will involve, as well as the amount of debt Kraft is taking on in order to secure the takeover.
In an announcement Monday, Kraft provided further details to its offer–and in particular the offer's mix-and-match facility, according to The Wall Street Journal. Kraft said that Cadbury shareholders who don't want Kraft shares would be better off accepting the cash-and-share offer and then selling the Kraft shares in the market, rather than receiving the offer in cash only.
Kraft's offer allows for shareholders to receive the offer in cash only, though this would amount to just 799 pence-a-share rather than the 827 pence value of the cash and share offer, the same source reports. Cadbury shares opened down 6 pence, or 0.8%, at 826 pence in a lower London market. The stock has risen 48% over the past 12 months.
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