Nestlé’s decision not to pursue its interest in Cadbury will help to strengthen Cadbury’s defence against Kraft’s takeover bid and from elsewhere, an expert claims. Nestlé has said it has no further interest in Cadbury, despite speculation it would team up with Hershey for a bid. Its decision follows the acquisition by Nestlé of Kraft’s North American pizza unit for $3.7bn (£2.3bn).
The influx of funds has allowed Kraft to increase the price it is willing to pay for each Cadbury share by a further 60p. The US company says it is increasing its offer “because of the desire expressed by some Cadbury security holders to have a greater proportion of the offer in cash”.
However, Santigao Childrez, director of Buenas Branding, says that beyond cash, the offer has no real value.
“Kraft is playing the money card, which may seem the right thing to do but doesn’t really reflect the brand’s value. The fact that Nestlé has opted to walk away from talks shows the strength of the brand in the confectionery market and the concept that it is valued and cannot be sold cheap. Savvy shareholders will be aware of this,” he says.
Kraft’s raised bid comes after Heineken’s chief executive Jean- Francois van Boxmeer and former chairman of apparel retailer VF, Mackey McDonald, joined its board of executives on 1 January. Cadbury is set to respond to Kraft’s revised bid next week.