Kraft says won't overpay for Cadbury as revenue misses
Chicago: Kraft Foods Inc said it would not overpay for British chocolatier Cadbury Plc on Tuesday after disappointing investors by posting weaker-than-expected quarterly revenue and cutting its full-year sales forecast.
Investors in both companies had hoped strong quarterly results would bolster the value of Kraft's initial USD 16.7 billion cash and stock proposal, but shares in the maker of Velveeta cheese and Oreo cookies fell 2.5 percent after-hours.
"Clearly, there has been a lot of speculation about what we can afford given these parameters, but as we said before, what we can afford is not relevant," Kraft Chief Executive Irene Rosenfeld said on a conference call, referring to her resolve to maintain a disciplined approach to the deal.
"What is relevant is what Cadbury is worth, and that will guide our actions going forward," she said.
Analysts had said Kraft may need to raise its offer for Cadbury to as much as 850 pence to 900 pence per share, from its original 745 pence per share proposal, to strike a deal. Since then, some investors have said that a Kraft bid closer to 820 pence per share could succeed as no counteroffer has emerged.
Before Kraft reported results, sources familiar with the situation said the company was likely to stick by its initial offer when it issues a formal bid in time for a November 9 deadline set by the UK Takeover Panel. Cadbury had rejected the proposal, first disclosed on September 7.
Its offer for Cadbury has dropped to 733.8 pence per share, or 10.03 billion pounds (USD 16.48 billion) based on Kraft's closing price on Tuesday.
Cadbury declined to comment on Kraft's results.
Bureau Report