CADBURY was last night locked in talks with Hershey in a bid to stave off Kraft’s hostile takeover attempt.
The British confectionery giant is not only seeking a higher price than Kraft’s £10.5bn hostile offer, but also a merger partner that would let it have some say in a combined company, two sources familiar with the discussions said.
Meanwhile, Cadbury’s shares took another battering yesterday on the London Stock Exchange, plunging perilously close to the value of hostile bidder Kraft’s current offer as it emerged only a tiny proportion of the UK firm’s investors have accepted the offer to date.
Kraft said it had received valid acceptances in respect of just 1.52 per cent of Cadbury shares, ahead of the 2 February deadline.
The announcement came just a day after billionaire investor Warren Buffett, a 9.4 per cent Kraft shareholder through his firm Berkshire Hathaway, challenged the structure of the bid, claiming the current equity-heavy balance fundamentally undervalues the US company’s stock.
Analysts yesterday speculated whether Buffett’s actions constituted a real attempt to block or significantly alter the bid, or a ploy to talk down the Cadbury price.
“What we think Berkshire is trying to do is to challenge Kraft’s management to back their conviction with cash (and hence debt), not equity,” said Investec analyst Martin Deboo.
Kraft has already improved the cash part of its offer after selling its pizza business on Tuesday to Nestlé, which has now ruled itself out of the running for Cadbury.