West Midlands Companies News

[sefton66]

Thought we could do with a thread for news on companys in and around Birmingham so here goes..

Kraft expected to put forward improved bid for Cadbury this week

US food giant Kraft is set to sweeten its hostile bid for Cadbury as it looks to melt the resolve of the Dairy Milk maker's shareholders, it was reported today.

Kraft - whose products range from Oreos cookies to Toblerone chocolate - is thought to be in the process of upping its existing £10.5 billion offer for its unwilling UK target.

Cadbury has slammed the bid as "derisory" and has sought to convince investors of its strength as an independent entity, citing good growth across its chocolate, sweets and gum divisions despite mixed trading conditions.

Kraft, which has until Tuesday to raise its bid, is understood to be planning an announcement tomorrow.

Reports of an increased Kraft bid come amid expectations that another US firm, Hershey, is set to enter the fray with a counter-bid for Cadbury.

According to The Sunday Times and the Observer, Kraft plans to improve its current 771p per share offer to 820p, testing the resolve of Cadbury's shareholders.

This would mean an extra one billion US dollars in cash (£615 million) from the firm.

But it is understood a group of 14 hedge funds with shares in Cadbury have already told Kraft they would want at least 850p a share.

The US firm has already hiked the cash element of its offer without increasing the overall price and it is expected to further add to this component of the deal as it looks to win over investors who do not want Kraft stock.

Chief executive Irene Rosenfeld has travelled to London to try to win support for its bid.

But Cadbury has launched a bullish defence of its position with detailed trading figures on an "outstanding" 2009, promises of sales growth of up to 7% during 2010 and a 10% hike in the dividend this year.

Its shares are also currently trading well above the value of the US firm's offer - a sign that markets expect an increased bid.

Meanwhile, Kraft is under pressure not to over-pay for Cadbury from its biggest investor, billionaire Warren Buffett, and has so far played on the fact that no other buyers are in the race.

But Hershey, which already has a relationship with Cadbury making Dairy Milk bars and Creme Eggs under licence in the US, is said to have decided that it can mount a bid without losing its investment-grade credit rating.

http://www.birminghammail.net/news/b...7319-25620915/

[sefton66]

and another...

Cadbury better off independent claims economic expert

Cadbury remaining independent would still be the best outcome for the company according to one of the region’s leading economists.

Prof David Bailey, of Coventry University’s business school, said out-performed those companies now hovering despite the difficult trading conditions.

He said: “Kraft effectively bought Nestlé’s silence last week by selling them its fast growing North American pizza business in a strategic management move of buying and selling a vast portfolio of brands rather than nurturing a business organically.

“Cadbury will reveal a fuller trading update later this week which will make Kraft’s latest offer even more unattractive. Cadbury shareholders might like to reflect on that if and when Kraft comes back with more cash. As I’ve said all along, Kraft needs Cadbury for growth - Cadbury doesn’t need Kraft for anything.”

In spite of Hershey’s interest it seems that Kraft is still in the running to mount a last-minute solo bid, he added.

“Make no mistake, a Hershey takeover of Cadbury would be a better bet than Cadbury being swallowed up into the slow-growth vast conglomerate that is Kraft, but Cadbury remaining independent is still the best possible outcome for long-term committed shareholders and workers.

“Like Kraft, one wonders how much debt Hershey would have to pile up to mount a takeover to pay-off Cadbury shareholders, debt that would then weigh on the new firm.

“And it’s not as is Cadbury needs to change its management. The firm has been performing brilliantly in tough trading conditions - somewhat in contrast to Kraft. Yet it is Kraft which has the offer on the table at this moment, and it is that offer which needs rejecting, in part because it makes little strategic sense anyway and also because of what might happen to jobs in the UK and further afield.”

Prof Bailey said Business Secretary, Lord Mandelson’s intervention where he was going to meet some of the UK’s largest institutional investors to discuss how to protect British companies from unwanted takeover bids was very welcome in the current climate.

He said: “Such a direct intervention is actually very welcome and reflects something of a shift in sentiment in Labour but urging a long-term commitment as Lord Mandelson seems to suggest is not enough. Policy should actually facilitate it.

“Essentially, hostile takeovers should be made more difficult - there are plenty of ways to do this and it’s simply not good enough for Lord Mandelson to use fine words but then claim he is powerless to act, as he has done recently. This needs to be rectified so that ministers can reclaim the power to act if it is in the public interest.”

http://www.birminghampost.net/birmin...5233-25605625/

[fruit&nut]

I wish Kraft would just Fuck right off!

Cadbury doesn't need the asset stripping, deby driven shite that Krapt will bring.

This has apparently become a personal pride issue for Krapt's chief-exec - they don;t give a toss about Cadbury or anyone for that matter.

[sefton66]

I personally think Cadbury should be the ones looking to buy up companies not be taken over

Business Secretary, Lord Mandelson’s intervention where he was going to meet some of the UK’s largest institutional investors to discuss how to protect British companies from unwanted takeover bids was very welcome in the current climate

this is good news though

[fruit&nut]

If the Government hadn't put such lax corporate legislation in place in the past, our companies wouldn't be such easy targets now.

Many of our great names have gone to the wall because of our weak stance on such matters.

French laws and German laws wouldn't allow it to happen. Drives me mad!

[djay]

Originally Posted by fruit&nut

If the Government hadn't put such lax corporate legislation in place in the past, our companies wouldn't be such easy targets now.

Many of our great names have gone to the wall because of our weak stance on such matters.

French laws and German laws wouldn't allow it to happen. Drives me mad!

real talk

[Bureau des etrangers]

Originally Posted by fruit&nut

I wish Kraft would just Fuck right off!.

I was just going to say exactly the same

they should get on with making their plastic cheese

[sefton66]

Cadbury is expected to accept higher bid from Kraft

The two firms could make an announcement in the morning
Kraft Foods is expected to raise its bid for Cadbury to a level that is accepted by the UK firm, BBC business editor Robert Peston has learned.

He says the US giant may raise its offer to between 840 and 850 pence per share, which at 850p would value the chocolate-maker at £11.7bn.

Kraft launched its hostile takeover bid for Cadbury in December, having its previous offer of 761p rejected.

The two firms may jointly announce the successful bid on Tuesday morning.

Shares in Cadbury ended Monday trading up 14 pence or 1.8% to 807.50p.

No-one from either Cadbury or Kraft has been available for comment.

Our business editor said it now seems "highly likely" that Kraft and Cadbury will agree a deal that will probably be announced at 0700 GMT on Tuesday.

It would also end any doubt at all that Cadbury will lose its independence.

There would still be a theoretical possibility that the US confectioner Hershey would come in with a higher offer.

But if Cadbury's board recommends Kraft's bid, it means that the company will be taken over.


Negotiations between Cadbury's bankers and Kraft's bankers are taking place overnight.


Unions and analysts have both warned that there will likely be job losses among Cadbury's 45,000 workforce following a takeover.

Kraft has a Tuesday deadline to make its second and final formal bid for Cadbury, or else have to walk away from the deal for a year.

The US giant had previously faced pressure from its leading shareholder - US billionaire investor Warren Buffett - not to overpay for Cadbury.

However, Kraft raised extra funds earlier this month when it sold its North American pizza business to Swiss group Nestle for $3.7bn (£2.3bn)

http://news.bbc.co.uk/1/hi/business/8466829.stm


Another loss of a british company that the government could have but never stepped in to save it?

[djay]

good bye cadbury

[Erebus555]

It's the end of the world! Cadbury World, that is...

[i_like_concrete]

Live by the free market... Die by the free market.

[WintrySarcasm]

Originally Posted by sefton66

Another loss of a british company that the government could have but never stepped in to save it?

And how would that work exactly? Unlike previous examples, Cadburys wasn't a failing company in a fire sale situation. So what exactly did you expect the government to do? Buy up a majority stake in the company?

Don't get me wrong, this is bad news, but blaming the government is just ridiculous. It seems the real villains are hedge funds who gobbled up Cadbury shares with the sole purpose of wanting a take-over to happen.

[markmcd1976]

Hello new Bournville housing estate...

Dairy Milk Drive, Cream Egg Crescent, Curly Wurly Close, Wispa Walk...you get the idea.

Five years, ten years max then it will all be gone.

[NewTroll]

It means Cadbury's/Kraft is saddled with huge debt now as it's borrowed heavily to invest this takeover. No doubt cuts will follow and product consolidation, etc, etc. Expect words like "product synergies" to be bandied around...

[majortim]

What a disaster. Thirty years of deregulation all in the name of enriching the City and it's mysterious 'trickle down effect'. Or should I say ever-widening inequality, a collapse in social mobility, communities left bereft of the workplaces they once took pride in etc. etc. The market has its place but we have to disabuse ourselves of the idea it's a magic bullet for everything.

[SimonTheSoundMan]

Ahh, hedge-funders and market bankers made their money today, everyone else is screwed.

I give it a month for Cadburys to see it's first redundancies at the HQ in London, a year until we see some go in Birmingham.

[depechemad]

this is real bad news, no doubt job losses will follow krafts statement saying there will be no redundancies

[MrSingh]

Cadbury Shareholders can still reject this deal. Unfortunately, many so-called 'loyal' or indigeneous shareholders happily sold up at a top price to American hedge funds who own a quarter of the Cadbury group shareholding and can certainly collude to ensure the transaction goes through by voting Yes when the proposition is made on paper from Kraft. Some Banks that have also received signficant bailout funds from HMT have also assisted in the financing of the deal. So it looks like there is a system in place that backfires (alot these days) when it comes to national interest. Job losses are inevitable and Kraft can't hide from the fact that unless they are (wholesale) moving their HQ from the US to London or Birmingham, then the strategic thinking (and the people who are paid those salaries to strategise) will be done elsewhere by different people.

This might sound ridiculous, and I'm not entirely against the invasions of Iraq./Afghanistan as they have certainly provided an opposition to Islamic extremism, but.... the British involvement is costing billions that could be spent on developing the West Midlands' infrastructure to attract world class companies to want to relocate there from elsewhere in the UK and Europe. Instead, Whitehall seems to see fit that everywhere North of Milton Keynes should suffer severe and fast structural declines in employment and skills, whilst London and the South East continually (and ineffectively) gains the largest investment programmes. Of course there is a North-South divide, its becoming extremer than ever before and is NOT helping the UK socially or economically and certainly makes the entire nation more susceptible to severe economic ruptures if for example London was attacked by an act of terror.

Local Government is an absolute necessity. Time for Billions of pounds to be invested in Greater Birmingham to provide the effective infrastructure with a regional Treasury to administer low-tax economic zones to bring business back... Otherwise the UK is finished...

[sefton66]

Cadbury says job cuts inevitable after Kraft takeover
Roger Carr: "What you pay enables to you to buy what you need."
Cadbury's chairman has confirmed to the BBC that job losses are an "inevitability" at the company after its takeover by US giant Kraft Foods.

Without estimating how many positions would be affected, Roger Carr said jobs would go at Cadbury's head office in Uxbridge, London.

However, he added that he saw Kraft both supporting and developing Cadbury's UK production facilities.

Mr Carr was speaking after Cadbury's board backed a £11.5bn bid from Kraft.

Prime Minister Gordon Brown said the government was "determined" to ensure that Cadbury jobs were secure.

"We are determined that the levels of investment that take place in Cadbury in the United Kingdom are maintained and we are determined that, at a time when people are worried about their jobs, that jobs in Cadbury can be secure," he said.


Cadbury's directors have advised the firm's shareholders to accept the offer, which represents 840 pence per share. Investors will also get a 10p per share dividend.


The increase in Kraft's debt to pay for Cadbury will doubtless worry its employees

Shareholders now have until 2 February to back the deal which, led by Cadbury's large institutional investors, is expected to be a formality.

Kraft's offer consists of 500 pence in cash, with the rest made up of Kraft shares. The US group will borrow £7bn ($11.5bn) to finance the deal.

The announcement that Kraft and Cadbury had reached agreement on a takeover was made on Tuesday after Kraft increased its previous hostile offer of $10.5bn, which Cadbury had rejected.


In an interview with BBC business editor Robert Peston, Mr Carr admitted that the decision to accept Kraft's improved offer was a "bittersweet moment".


However, he said the deal represented good value for Cadbury shareholders, which was what he was paid to focus on.

Although "there will clearly be some cost savings they have to make", Mr Carr said he hoped Kraft would take on some of Cadbury's senior team.

"People are the key to successful businesses, they need to be cared for, and I'm sure Kraft understands that," he said.

"I shall miss not being chairman of Cadbury, but I'm sure those that own it now will develop it as a strong company, respecting its British routes, but growing it as a global company."


Kraft has already said it expects to achieve "meaningful cost savings" as a result of the merger.

While it has given no specific assurances over the future of 4,500 UK jobs, it says it wants to invest in Cadbury's Bournville site in Birmingham, and maintain production at Somerdale, near Bristol, also known as Keynsham.

David Cumming, head of UK equities at Cadbury shareholder Standard Life, said that he would be backing the takeover.

"I won't go against the view of Cadbury's management," he told the BBC.

"Kraft are getting a good deal. It's sad that Cadbury is gone, but business is business."

Irene Rosenfeld, the chairman and chief executive of Kraft Foods, said the deal was good news for shareholders and staff.

"We have great respect for Cadbury's brands, heritage and people," she said. "We believe they will thrive as part of Kraft Foods."

http://news.bbc.co.uk/1/hi/business/8468540.stm

At first it sounds like bad news but Kraft have said they want to invest in Bournville Cadbury so lets just hope they stick to their words and it could be good news

[markmcd1976]

The day isn't even finished and they are talking about job cuts!