Cadbury Schweppes Share Discussion Threads

[spob] 18/11/2009 11:16

RNS Number : 6939C
Hershey Company (The)
18 November 2009

The Hershey Company


NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR
FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE
RELEVANT LAWS OF THAT JURISDICTION


18 November 2009
STATEMENT REGARDING CADBURY PLC


The Hershey Company ("Hershey") notes the recent press speculation regarding a
potential offer for Cadbury. Hershey confirms that it is reviewing its options
and at this stage there can be no assurance that any proposal or offer from
Hershey will be forthcoming. A further announcement will be made in due course
if appropriate.

[kumala] 18/11/2009 08:48

Fab: looks like its all to play for now, share price should slowly head north in anticipation of a new bid or revised offer, we might be lucky and see the share price near the £9 mark, Il be happy anything around £8.50 and upwards, not greedy me. ha
K ;)

[strangled69] 18/11/2009 08:35

Higher bid price from Kraft coming for sure - £8.50

[kumala] 18/11/2009 08:24

cheers jaws6

Tinker, let the games begin, ;)


K

[tinker] 18/11/2009 07:40

From this morning's Telegraph. Only a rumour but should send the share price north.

Hershey and Ferrero plot joint bid for Cadbury
American and Italian chocolate makers are planning to trump Kraft as the battle for the British confectioner takes another twist.

By James Quinn in New York and Ben Harrington
Published: 12:19AM GMT 18 Nov 2009

Ferrero, the maker of Ferrero Rocher chocolates, is looking to team up with Hershey in a bid for Cadbury. AMERICAN confectioner Hershey and Ferrero, the Italian chocolatier, are considering a joint bid for Cadbury in a move that looks set to rekindle one of the year's biggest takeover battles.

Hershey, the firm behind the eponymous chocolate bar, and Ferrero, which makes the iconic Ferrero Rocher chocolates, have held talks in recent weeks about trumping the £10bn bid for the British sweet company by Kraft, the American food giant.

NM Rothschild has been mandated to advise Ferrero along with Watch Hill Partners, another boutique. Byron Trott, the former Goldman Sachs banker who set up his own firm backed by Warren Buffett, is understood to be working with Hershey. .

Sources said the discussions are at an early stage and may not result in a bid being tabled. But the talks are the first piece of evidence that rival bidders for Cadbury may emerge.

Insiders said that there is debate between the companies about which party would take possession of Cadbury's high-margin gum and candy businesses such as Trident and Halls.

Hershey has been seen as a potential counter-bidder ever since Kraft's interest in Cadbury became public in September. The Pennsylvanian chocolate company is known to be keen to expand overseas to diversify its sales which are 85pc based in America. However, analysts have said from the start that it would struggle to muster the financial firepower to launch a bid.

Although a joint bid with another company makes sense, the Hershey Trust, which controls the company, is thought to be unlikely to want to back a move that could dilute its holding.

Ferrero, which is privately-owned and makes Nutella chocolate spread and Tic Tacs, is far smaller than Kraft with just €6bn (£5.3bn) of sales last year. Michele Ferrero, the head of the family, is said to be determined to maintain the firm's independence while his sons, Pietro and Giovanni, are keen to expand with a partner.

The Daily Telegraph on Tuesday first confirmed Ferrero's interest in Cadbury. That report prompted a note from Nomura Securities which said: "As an entirely family-controlled entity it is very difficult to gauge Ferrero's thinking here . . . But being left on the sidelines of consolidation taking place around them can't be an attractive proposition."

Kraft unveiled its £9.8bn hostile bid for Cadbury on November 9, valuing the shares at approximately 726p based on last night's prices, against Cadbury's current price of 788p.

In its formal proposal, Kraft essentially maintained the offer it proposed in September when it first publicly announced its intention to buy Cadbury. Cadbury swiftly rejected the hostile offer, calling it "derisory".

Under Takeover Panel rules, the company has until December 7 to posit its formal offer document to shareholders, and Cadbury must publish its defence document by December 21. Hedge funds, including Paulson & Co, have recently bought large stakes in Cadbury, on the expectation of a higher offer.

Spokesmen for Cadbury and Ferrero declined to comment, while Hershey could not be reached.

[jaws6] 17/11/2009 21:10

kUMALA
Please try wsj .com .
there is story in paper with Hershey and Ferro talks.

[kumala] 17/11/2009 16:32

Must have missed it
K

[kumala] 17/11/2009 16:30

THANKS WILL LOOK NOW
K

[jaws6] 17/11/2009 16:18

On bloomberg they talking about report of Italian deal ? on bloomberg now they talking on this .

[kumala] 17/11/2009 15:25

c,mon me beuty................... zz zz
K

[kumala] 17/11/2009 14:16

were slowly edgeing north - wards. ;)

[kumala] 17/11/2009 09:19

yea, all to quiet, Im siting on a loss at the moment so am happy to wait and see what happens, good that the share price is holding steady for the time being though.
K

[wad collector] 17/11/2009 08:42

I've decided to take the bird in the hand.The rival bid story is beginning to look like wishful thinking to me now , I'll buy them back if it falls through.

[topvest] 15/11/2009 15:52

No. I don't think we will get £10 unless Cadbury stays independent. £8.50 or so looks like the most we will get at the moment in a bid. For most people £8.50 is better than £10 value in 4/5 years.

[kumala] 15/11/2009 13:12

£10 is good but will we ever get to that price, ? unless there is a counter bid and a war erupts between two suiters I think we will be lucky to get somewhere around 8.40 - 8.70, Not sure how all this is going to pan out but time will tell, we need another bider to come onto the playing field to realy get things moving.
K

[topvest] 15/11/2009 12:51

Starting to hot-up with these comments in the press.

Nick Train's comments are interesting;

The Trust has had a nicely timed fillip
from two of our long-standing holdings.
Following AG Barr's good results its share
price responded rising 21% in the month
but Cadbury was the best performer, up
38%, following an announcement of a bid
approach from Kraft. Kraft's bid was not
only pleasing in its contribution to
performance but it also provided an
important validation of our core working
hypothesis that exceptional and durable
businesses tend to be undervalued by
most investors most of the time. Our
longer standing shareholders know that
we have held Cadbury since the Trust
began and they will have been
bombarded with all manner of comments
in previous monthlies justifying its
ownership and lamenting on why others
could not recognise the value we saw in
the company. As a reminder, we believe
that it has always been undervalued and
remains so today, although by less than
ever before.
Why?
First, we have always considered that
other investors have not appreciated just
how rare a franchise such as Cadbury is,
with its wide range of chocolate,
confectionery and gum brands many of
which have been around - and we
anticipate will continue to be around - for
generations. Surprisingly few quoted
companies meet this test of durability, as
evidenced by the high attrition rate for
constituents of equity indices – our
analysis suggests that over 20 year
periods only 20% of companies in major
market indices survive in the same form.
Next, it is important to recognise that its
rarity and survivorship is a product of the
ability of the company to grow its cash
flow in real terms consistently over such
multi-year, actuarial time horizons. Over
the 34 years from 1975 to 2009 (longest
data available) Cadbury grew its real
dividends (a good proxy for cash flow) by
5.7% per annum, a exceptional
performance when one considers that
over the 50 years from 1950-2001 the
real growth in dividends in the UK market
was approximately 2.3% per annum.
During this period there was only one cut
in the annual dividend, in 2002, and even
then dividends exceeded their previous
levels by the next year.
And finally, we think it is wrong to apply
an equity risk premium to a discounted
cash flow valuation of a company such as
Cadbury, as most other investors explicitly
or implicitly must do. Why should Cadbury
be valued at a yield premium to a longterm
UK gilt, when it promises - and has
had a history of delivering over many
years through good times and bad - a
growing stream of real income.
Events like Kraft's bid for Cadbury confirm
to us that there are other investors who
recognise such exceptional stores of
value. Kraft knows a lot about the value
of brands and it is a welcome validation of
our hypothesis when such an informed
corporate buyer sees the same value in
an asset we own. And clearly the full
value of Cadbury is above the initial bid
price; probably Kraft's tactical first shot.
In all likelihood Kraft have budgeted for
an uplift from the initial offer in order to
win the bid and, even then, in order to
buy the company and extract value from
the investment for their shareholders,
prudence would suggest that the final
offer must be pitched at a discount to
what they believe is the true full value.
For what it is worth, we think Cadbury is
worth about £10 per share versus the
£5.70 it was trading at before the bid.
Contrary to our prediction in the last
monthly, there have been no further
developments on Cadbury. But next
month there will be, as Kraft has until 9th
November to submit a formal bid or
withdraw for six months. Also, Cadbury
have a trading update next week which
should give us clues on how the business
is doing.

He thinks Cadbury is worth about £10 a share.

[spob] 15/11/2009 11:36

Kraft's offer showed contempt for Cadbury, says chairman Roger Carr
The chairman of Cadbury has described Kraft's offer for the confectionery firm as "in contempt of the market's expressed view" because it is so far below analysts' valuations.

By Kamal Ahmed
Published: 9:37PM GMT 14 Nov 2009

Cadbury
Speaking for the first time since the offer was made, Mr Carr made it clear that shareholders and the board were united in the view that the present offer was unaccept-able. Kraft announced a £9.8bn hostile bid for Cadbury on Monday which valued the shares at 718p. Because of market changes, this was a 4pc drop on the original offer which had valued the shares at 745p.

"It was mid-morning on Monday when we first received the proposal which proved to be an even more unacceptable price from the same unappealing source," Mr Carr said. "I've spoken over the week to a lot of the shareholders and have been very pleased by their feedback. I'm sure it must have been irritating for shareholders to receive the reduced offer which was clearly in contempt of the market's previously expressed views.


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Cadbury ponders Australian beverage sale"I firmly believe this to be a derisory offer from a company which sees Cadbury as a strategic solution to fill the gaping hole of growth in their business model."

Mr Carr's robust comments will increase speculation that Kraft will have to raise its bid significantly if it is to be successful. A number of hedge funds have extended their positions in Cadbury, judging that a higher offer is imminent.

Cadbury is now working on its defence document which will detail recent valuations of the business. An analyst's note from Bernstein Research, which has been circulating widely among Cadbury shareholders, said last week: "Kraft has some time before it must make its final offer . . . and we continue to believe that a bid of £9.00 (or close) will get management, and shareholders on board, and get a deal done.

"We consider that £9.00 would be a fair and reasonable price for both sides."

Mr Carr said that the board's decision to reject the offer was an easy one. "Since the original approach and following our recent excellent results, the value of the business had increased and the Kraft offer had reduced. It enabled the board to make a firm decision in a short time frame."

He said he was comfortable with the changes in the share register, with large funds such as Paulson & Co taking a 2.08pc stake.

"Some of the register has changed and some hedge funds that have had small positions have increased their holding," he said. 'That change has come [from] a number of what I would term very serious and responsible hedge funds. Evidently, they have seen a real value opportunity. They have a reputation for making a long term commitment. They know what good looks like.

"I believe what they see with Cadbury is the limited downside risk of holding a good quality company with sound growth prospects.

"I don't think they are foolish enough to let value flow through to the hands of Kraft who are clearly hoping to acquire the business on the cheap. I don't see these people letting that happen."

Mr Carr dismissed suggestions from Kraft sources that Cadbury would not be able to sustain its third-quarter performance which was welcomed by most analysts as being ahead of expectations. One Kraft source claimed Cadbury had "goosed up" the numbers.

"That is not the case," Mr Carr said. "Kraft didn't appear on the radar until the end of August."

Kraft chief executive, Irene Rosenfeld, has told colleagues that the American company has no need to "bid against itself" and that, given Cadbury's pre-bid share price, the offer is a fair one. As yet no other bidders have come forward. Mr Carr said that Kraft's analysis was "flawed".

"The Kraft view that there always has to be more than one bidder to determine value is a flawed concept. It completely ignores the fact that those people who own the company today understand the value of the asset and it assumes that they are foolish enough to pass that value to a third party.

"It is another measure of their contempt for share-holders. They bid an even lower price the second time around and they ignore the message they are receiving from the market – they seem to be acting in a vacuum."

[careful] 13/11/2009 12:33

A Kraft share price of $30 is 8 quid.
be patient.

Kraft up 1% in US right now.
Slowly this offer is looking better.

[talon13] 13/11/2009 12:23

Monty, I don't think Kraft can afford to go over 800, so that leaves us with a bit of a problem.

[montyhedge] 13/11/2009 11:50

Paulson increasing again? anyone with common sense know Kraft have to bid 820p to have any sort of chance of winning.

[kumala] 13/11/2009 09:38

Must be all good for us P.I's
K

[careful] 13/11/2009 09:35

by waiting for the kraft share price to rise and the $ stregthen.
it would be possible for this offer to be worth 850p+ within a month or 2.
there will be pressure from kraft shareholders not to overpay.

paulson is in a win win situation.
if this happens he will make a shedload of cash.
if it does not kraft will up their bid.

he only loses if kraft walk away.
he is on a roll but is due a stinker.

[montyhedge] 13/11/2009 09:35

Top ten investors want 800p+ Paulson the hegie buying 2,4% around 759p he wants 875p.

[careful] 12/11/2009 17:31

kraft will win this without raising the offer.