Cadbury prepares final defence against Kraft takeover

The takeover battle for Cadbury moves towards its climax this week when the chocolate company releases its final defence against a hostile bid launched by Kraft of the US. Cadbury is expected to attack predator Kraft's stock price performance since its demerger from Philip Morris more than eight years ago. Kraft's shares were worth about $31 in 2001, but on Friday were valued at little more than $27, a fact that Cadbury chairman Roger Carr could use to reiterate his position that Kraft is a low-growth conglomerate trying to acquire Cadbury on the cheap. Kraft, which first approached Cadbury in late August, has until 19 January to increase its offer, which currently values the company at about 740p per share. British investors say that the company is worth at least 850p and have supported the board's decision to reject the bid. Cadbury's shares closed on Friday at 777p, down 20p on the week after Kraft's biggest investor, Warren Buffett, warned the company not to overpay. Speculation is still swirling, however, that another US confectionery company, Hershey, could team up with Ferrero of Italy to launch a counter-bid, but the two groups are expected to wait and see if Kraft raises its bid next week before showing their hand. Todd Stitzer, Cadbury's chief executive, has suggested Cadbury would prefer being acquired by Hershey to being acquired by Kraft due to the companies' cultural similarities. But Carr has said the board will base any recommendation purely on value. Tomorrow Cadbury will disclose unaudited figures that will provide investors with estimates of its 2009 profits and sales, as well as indicate current trading conditions. Two days later, Cadbury will release more detailed information for City investment analysts. It has already said it is on track to meet new financial targets, including annual revenue growth of between 5% and 7%. It also aims to increase profit margins to between 16%-18% by 2013. Last week, business secretary Lord Mandelson repeated his warning that the government may not sit idly by if the reason for Kraft's takeover of Cadbury was merely to make "a fast buck". During a speech to the Work Foundation, he said: "Companies making acquisitions should set out transparently and publicly their long-term plans for the assets they propose to acquire, including company headquarters, R&D sites and main plants. Although these remain commercial decisions, firms or investors should expect to brave the court of public opinion if they are motivated only by short-term profit."