My finance view

Large Cadbury investors are worried Chief Executive Todd Stitzer may overplay his hand in fending off Kraft’s $10 billion offer, with no white knight in sight to spark a bidding war.

The U.S. firm’s current 745 pence-per share offer was “unacceptable,” shareholders contacted by Reuters said, but a bid of more than 900 pence mentioned by analysts seemed unlikely because of the lack of any rival bidders.

“It’s a bit dangerous to get too greedy because they haven’t got any competitive tension and there is a risk that they fail if they get too aggressive,” said one UK-based top 25 investor in Cadbury, who declined to be named.

“No-one is going to accept the current bid and we believe Kraft will pay more — I am not sure that Kraft would want to pay that much (900 pence). Above 8 pounds would be the killing zone,” he said.

Smaller Kraft shareholders said they expected the company to raise its offer, and that a 10-15 percent increase would be acceptable, raising the bid to around 850 pence.

Stitzer spent Thursday telling a fair trade retail conference about the “principled capitalism” he feared was at risk from over-leveraged dealmakers, according to media reports, though he did not refer directly to Kraft.

He also harked back to Cadbury’s heritage: the company was founded by a family of Quakers who wanted to wean people away from alcohol and make them drink chocolate instead.

The robust public stance came after Stitzer detailed potential benefits from a takeover, with his comments leading to some speculation that Cadbury would see a price of 900 pence as fair and that it was leaving the door ajar to Kraft.

A Cadbury spokesman said after Stitzer’s comments that they were theoretical and did not signal a shift in the company’s position.

Cadbury shares traded up 0.5 percent at 798 pence by 1241 GMT, outpacing a 0.2-percent rise in the FTSE 100. The shares were at 568 pence before the offer was made.

A UK-based top 35 investor in Cadbury said: “The worry for us is that they will overplay their hand and completely scupper a bid and then we will be left with a share price that is rather too high for the ordinary operating business.”

SHAREHOLDER SHIFT

Cadbury is clearly proud of its heritage — its telephone hold music is a nostalgic compendium of advertising jingles — but its ownership has undergone a huge shift over the decades.

It was a family firm for more than a century, and family members still hold stakes, but its main investors are now the large institutions which dominate the corporate landscape, and with an increasingly North American flavor.

Data from Thomson Reuters show the confectioner is largely split between 153 UK investors and 134 from the United States, equating to percentage holdings of 40.5 and 22.6 respectively. 

Read more