Kraft set to clinch Cadbury takeover

A takeover of Cadbury would end more than 180 years of history for the colourful maker of Dairy Milk chocolate bars and Trident chewing gum.

LONDON, January 19, 2010 (AFP) - US food giant Kraft was set Tuesday to win control of British confectioner Cadbury, as the pair revealed they were finalising terms of a friendly takeover, ending a bitter war of words.

The pair released a brief statement in response to mounting press speculation that Cadbury would agree to a sweetened bid worth up to 11.7 billion pounds (13.3 billion euros, 19.2 billion dollars).

A takeover of Cadbury would end more than 180 years of history for the colourful maker of Dairy Milk chocolate bars and Trident chewing gum. The group began life as a small grocer's shop in Birmingham, central England, in 1824.

"The boards of Kraft Foods Inc. and Cadbury plc confirm that they are finalising the terms of a recommended offer for Cadbury plc. A further announcement will be made shortly," the companies announced.

Prior to Tuesday, Cadbury had repeatedly rejected the takeover offer from Kraft, arguing that it was "derisory" and undervalued the London-listed firm.

Reports suggested that a deal could be announced later Tuesday, after the pair held late-night talks, ending a prolonged war of words that has raged since the US firm launched a hostile bid last year.

Kraft had until Tuesday to raise its cash-and-shares offer, which currently values the iconic British firm at about 10.5 billion pounds.

The BBC, which did not cite its source, said Kraft may hike its offer to between 840 and 850 pence a share, adding that at 850 pence Cadbury would be valued at around 11.7 billion pounds.

A Cadbury spokeswoman refused to comment further on Tuesday, while Kraft was unavailable for comment.

The deal -- if it is agreed by Cadbury management -- comes after months of hostility between the two groups.

Kraft had made a 10.2-billion-pound offer for Cadbury in September.

However, Cadbury, led by American chief executive Todd Stitzer, rejected the bid, saying that it "fundamentally undervalued" the group.

Cadbury has put up a staunch defence, insisting recently that its 2009 performance had been "outstanding" -- a claim which was dismissed by Kraft as "underwhelming."

But the US firm raised the cash component of the offer earlier this month, after selling its North American pizza division to Swiss rival Nestle for 3.7 billion dollars.

The Kraft tie-up also faced opposition in Britain with protest from senior ministers over the attempt by a huge American firm to take over a homegrown company.

There have also been fears about British job losses, with trade union Unite warning Kraft would be saddled with huge debts leading them to axe 7,000 posts at Cadbury and 20,000 at the company's sub-contractors.

Meanwhile, US chocolate maker Hershey had also been considering a counter-offer for Cadbury, the Wall Street Journal reported last week, adding that it planned to bid at least 17.9 billion dollars.

Cadbury, the world's second biggest confectionery company behind Mars, also produces chocolate bar brands Crunchie, Fudge, Flake and Wispa. It now employs 45,000 staff in 60 countries.

Dairy Milk is the most popular chocolate bar in Britain -- and the company sells more than 250 million bars every year in 33 countries around the world.

Other top-selling brands include Cadbury Creme Eggs, Halls throat lozenges and Milk Tray chocolate boxes.

Kraft, the world's second biggest snacks group after Nestle, makes numerous well-known products including Dairylea cheese, Milka and Toblerone chocolate and Oreo cookies.