Cadbury Gives More Reasons for Rejecting Kraft's Offer
The board of Cadbury plc publishes its second response document following the offer posted by Kraft Foods Inc. on Dec. 4, 2009. The board has unanimously rejected Kraft's "wholly inadequate" offer and continues to recommend that shareholders take no action in relation to the offer.
The response document sets out the latest estimate of Cadbury's outstanding financial performance for 2009 and highlights its strong business momentum going into 2010. The document also gives further reasons why Cadbury believes Kraft's offer is even more unattractive today than it was when they published the offer in December, including:
--The offer price values Cadbury at only 12.0 times 2009 EBITDA(1)(2)
--Lower than any comparable transaction in the sector (14.3 - 18.5 times EBITDA)
--A significant discount to Kraft's own publicly stated branded food benchmark of 14 times EBITDA
--Since Kraft's approach on Sept. 4, 2009, the board believes that Cadbury's standalone value has risen further
--Cadbury's 2009 financial performance is ahead of previously upgraded expectations
--Cadbury has set out upgraded targets for the next four years of its "Vision into Action" plan, including 5 percent to 7 percent revenue growth, 16 percent to 18 percent margin by 2013 and significantly higher levels of cash generation and returns
--Equity markets globally have risen substantially
--The share prices of Cadbury's peers have increased on average by 12 percent
--The majority of the offer consideration comprises Kraft's shares; this is unappealing given Kraft's unattractive business model and poor track record of delivery
--Kraft has an unfocused, conglomerate business model with significant exposure to lower growth categories and a track record of missed financial targets
--Kraft shares have significantly underperformed; down 42 percent compared to its peers since its IPO in June 2001
The board of Cadbury is committed to maximizing shareholder value and, against the background of the Kraft bid, believes that this is best achieved through the strong continuing performance of an independent Cadbury.
Roger Carr, chairman of Cadbury, says: "Kraft's offer is even more unattractive today than it was when Kraft made its formal offer in December. Our 2009 performance is ahead of our previously upgraded expectations and we have excellent momentum going into 2010."
Related Stories:
Kraft Stands Firm on Cadbury Offer
The response document sets out the latest estimate of Cadbury's outstanding financial performance for 2009 and highlights its strong business momentum going into 2010. The document also gives further reasons why Cadbury believes Kraft's offer is even more unattractive today than it was when they published the offer in December, including:
--The offer price values Cadbury at only 12.0 times 2009 EBITDA(1)(2)
--Lower than any comparable transaction in the sector (14.3 - 18.5 times EBITDA)
--A significant discount to Kraft's own publicly stated branded food benchmark of 14 times EBITDA
--Since Kraft's approach on Sept. 4, 2009, the board believes that Cadbury's standalone value has risen further
--Cadbury's 2009 financial performance is ahead of previously upgraded expectations
--Cadbury has set out upgraded targets for the next four years of its "Vision into Action" plan, including 5 percent to 7 percent revenue growth, 16 percent to 18 percent margin by 2013 and significantly higher levels of cash generation and returns
--Equity markets globally have risen substantially
--The share prices of Cadbury's peers have increased on average by 12 percent
--The majority of the offer consideration comprises Kraft's shares; this is unappealing given Kraft's unattractive business model and poor track record of delivery
--Kraft has an unfocused, conglomerate business model with significant exposure to lower growth categories and a track record of missed financial targets
--Kraft shares have significantly underperformed; down 42 percent compared to its peers since its IPO in June 2001
The board of Cadbury is committed to maximizing shareholder value and, against the background of the Kraft bid, believes that this is best achieved through the strong continuing performance of an independent Cadbury.
Roger Carr, chairman of Cadbury, says: "Kraft's offer is even more unattractive today than it was when Kraft made its formal offer in December. Our 2009 performance is ahead of our previously upgraded expectations and we have excellent momentum going into 2010."
Related Stories:
Kraft Stands Firm on Cadbury Offer
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1. This statement includes a profit estimate based on the results included in the unaudited management accounts for the eleven months ended 30 November 2009 and the Cadbury Directorsââââ¬Å¡¬âââ¬Å¾¢ estimate of the results for the one month ended 31 December 2009, which take account of the Groupââââ¬Å¡¬âââ¬Å¾¢s preliminary view of sales and underlying profit from operations for that month. This statement is a profit estimate for the purpose of Rule 28 of the City Code. As such, it is a requirement that this statement be reported on by the Company's reporting accountants and financial advisers in accordance with Rule 28 of the City Code. The bases and assumptions behind the reports of the reporting accountant and financial advisers are set out in Appendix 2 of the Response Document. The reporting accountant and financial advisers have given and not withdrawn their consent to publication.
2. Estimate to be confirmed or revised in the updated document that will be published after the market close on 14 January
1. This statement includes a profit estimate based on the results included in the unaudited management accounts for the eleven months ended 30 November 2009 and the Cadbury Directorsââââ¬Å¡¬âââ¬Å¾¢ estimate of the results for the one month ended 31 December 2009, which take account of the Groupââââ¬Å¡¬âââ¬Å¾¢s preliminary view of sales and underlying profit from operations for that month. This statement is a profit estimate for the purpose of Rule 28 of the City Code. As such, it is a requirement that this statement be reported on by the Company's reporting accountants and financial advisers in accordance with Rule 28 of the City Code. The bases and assumptions behind the reports of the reporting accountant and financial advisers are set out in Appendix 2 of the Response Document. The reporting accountant and financial advisers have given and not withdrawn their consent to publication.
2. Estimate to be confirmed or revised in the updated document that will be published after the market close on 14 January
