Kraft sticks by hostile bid for Cadbury

[December 15, 2009]  LONDON (AP) -- Kraft Foods Inc. questioned the robust growth targets of Cadbury PLC as the U.S. food company stuck by its 9.8 billion pound ($16.3 billion) hostile takeover for the British chocolate maker on Tuesday.

Kraft suggested it has no plans to raise the price of its cash and shares offer, despite a recent surge in Cadbury's share price that leaves the offer well below current trading levels.

The U.S. company was responding to Monday's launch of formal defense documents by Cadbury, which seized the moment to play up its position as a strong independent company by raising its long term performance targets.

"We have heard nothing from Cadbury that surprises us," Kraft Chairman and Chief Executive Officer Irene Rosenfeld said in a statement. "Cadbury's defense document only reinforces our belief that there is a compelling strategic and financial rationale to combining these two companies and that doing so would be in the best interest of both companies' shareholders."

Kraft, based in Northfield, Illinois, said that shareholders should consider how the company plans to meet raised profitability forecasts without more spending on restructuring and how sales can accelerate amid low food price inflation.

Cadbury, which also confirmed that it had received rival approaches from The Hershey Co. and Italy's Ferrero International SA, lifted organic revenue growth to 5-7 percent per year, up from a previously forecast 4-6 percent, and forecast improved margins of 16-18 percent by 2013, up from the "mid-teens."

The company also held out a carrot to investors of double digit growth in dividends per share from 2010 onwards.

But some analysts have suggested those projections, at the top of the forecasts for the confectionary market, could be tough for Cadbury to achieve alone and Carr did leave the door open for some kind of tie-up.

[Associated Press]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.