US giant Kraft Foods today launched a £10.2 billion sterling takeover bid for Cadbury but the British confectionery maker has rejected the offer, Kraft Foods said.
Kraft said it hoped Cadbury, whose share price surged more than a third in value following the bid announcement, would eventually come round as the US company looks to increase annual revenues to $50 billion a year.
A tie-up would merge leading Kraft brands Oreo biscuits and Maxwell House coffee with Cadbury's Dairy Milk chocolate and Trident chewing gum.
'Kraft Foods today announces that it has made a proposal to the Board of Cadbury to combine the two companies. The Board of Cadbury has rejected this proposal,' a statement issued by Kraft to the London Stock Exchange said.
The offer values the entire issued share capital of Cadbury at £10.2 billion,' it added.
Kraft Foods said it had proposed 300 pence in cash and 0.2589 new Kraft Foods shares per Cadbury share. This valued each Cadbury share at 745 pence, 31% higher than Cadbury's closing share price last Friday.
'This proposed combination is about growth,' Kraft Foods chairman and chief executive Irene B Rosenfeld said. 'We are eager to build upon Cadbury's iconic brands and strong heritage through increased investment and innovation,' she added.
Kraft Foods said a tie-up would lift its revenues to about $50 billion a year from $42 billion presently.
Cadbury recently posted a tripling of half-year net profits thanks to a strong performance in emerging markets and its chocolate division. Cadbury's profits after tax hit £313m in the six months to June compared with £113m the same time last year. Revenues advanced 13% to £2.77 billion.
Cadbury last year completed the demerger of American Beverages. Prior to the split, Cadbury was known as Cadbury Schweppes. The US business was renamed Dr Pepper Snapple Group.
