Kraft’s new offer has been made possible following a deal to sell its North American pizza unit – which sells brands including DiGiorno and California Pizza Kitchen – to Swiss food giant Nestlé for $3.7bn (£2.3bn).
The company will announce full details of its new offer before 16 January. The Kraft offer will allow Cadbury shareholders to opt for more cash in lieu of some of the new Kraft shares they would have been entitled to receive.
As a result of the sale, Cadbury’s biggest confectionary rival Nestlé says it does not intend to table a takeover bid for Cadbury despite recent speculation. Nestle had been linked to a possible offer following Kraft Food’s hostile bid for Cadbury, announced in December.
In a statement, Nestlé says: “After discussions with the UK Takeover Panel regarding the potential for further speculation in respect of Cadbury following Nestlé’s recent announcements, Nestlé confirms that it does not intend to make, or participate in, a formal offer for Cadbury.”
Kraft’s original bid was £3 plus 0.26 new Kraft shares for each Cadbury share – a deal that analysts said would be unlikely to tempt shareholders.
The Cadbury board has launched a fierce defence against the Kraft bid, calling it “derisory” and arguing that it undervalues the business.
Nestlé’s announcement that it will not proceed with an offer comes after mounting speculation from business experts yesterday, following the sale of its remaining stake in eye care group Alcon to Novartis for $28.1bn (£17.4bn) – a deal perceived as freeing up cash for a Cadbury bid.
However, on Tuesday it instead spent some of that money buying Kraft’s frozen pizza business, in the US and Canada.
Hershey and Ferrero have also indicated that they are considering making offers for Cadbury, though they have yet to post formal bids.
Kraft’s raised bid comes as new independent directors with considerable brand building and marketing experience join its board of executives. Heineken’s chief executive Jean-Francois van Boxmeer and former chairman of retailer VF, Mackey McDonald, joined its board of directors on 1 January.
Daryl Fielding, the former Ogilvy & Mather executive and prime architect of the Dove Real Women campaign, also joins the company as its new European vice-president of marketing this month.
Shareholders now have until February 5 to respond to Kraft’s offer.