British group Cadbury has raised its long-term growth targets and reported upbeat trading as it dismissed a £10 billion bid from Kraft Foods. The Dairy Milk chocolate maker called Kraft's bid wholly inadequate.
'Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model,' chairman Roger Carr said. 'Don't let Kraft steal your company with its derisory offer.'
Highlighting the strength of its 'stand-alone' strategy, Cadbury outlined a higher growth vision for an independent future as a fully focused confectionery group built around strong sales growth and a rise in profit margins.
The group raised its underlying annual sales growth target to between 5% and 7% from its previous 4% to 6% range and saw operating margins by 2013 in a range of 16% to 18% after looking for a mid-teens margin by 2011.
It also looked to double-digit percentage rises in dividend pay-outs from 2010 onwards, and a higher rate of converting operating profits into cash flow also from 2010.
Kraft's hostile cash and shares offer is currently worth 727p, or £10 billion, against Cadbury's closing share price on Friday of 790.5p, and most analysts believe Kraft will need to pay 820p to 850p to win.
Kraft has declined to raise its bid from the terms first announced on September 7 with 300p in cash and the rest in new Kraft shares. US-based Hershey and Italy's Ferrero have said they are contemplating bidding for Cadbury, while Nestle is said by analysts to be watching events closely.
