United Kingdom · Company filings
What Kraft paid for Cadbury and how the deal changed UK takeover rules
Kraft's recommended offer combined 500 pence in cash and 0.1874 Kraft shares per Cadbury ordinary share. The U.S. buyer declared the offer unconditional in February 2010. The takeover became a test case for Britain's rules on bidder statements and offer conduct.
Sources checked
- 19 January 2010Recommended final offer
500p and 0.1874 Kraft shares, valued at 840p on reference prices Source 1
- 28 January 2010 price referenceProspectus revalues the same package
825.63p per Cadbury ordinary share Source 2
- 2 February 2010Offer becomes unconditional
71.73% of issued share capital represented by valid acceptances Source 3
- 9 February 2010Somerdale position changes
Kraft announces it will not keep the factory open Source 4
- January 2011Somerdale factory closes
Closure recorded by the parliamentary committee Source 4
- 2011UK Takeover Code reforms
28-day bidder deadline and restrictions on most inducement fees Source 5
The offer's share component changed in sterling value even though the exchange ratio remained the same.
A fixed exchange ratio still produced a variable sterling price
The 840p figure used Kraft's US$29.58 closing share price on 15 January and US$1.63 per pound. The later prospectus used US$28.04 and US$1.6137 per pound and reported 825.63p. The 500p cash payment and the number of Kraft shares were the same in both calculations. Source 1 Source 2
Unconditional status followed tender acceptances
Kraft reported valid acceptances covering about 71.73% of issued Cadbury ordinary share capital on 2 February. It said the outstanding offer conditions had been satisfied or waived. The percentage describes the acceptances at that point rather than the eventual stake after the remaining process. Source 3
The regulator examined what the bidder had said about Somerdale
The parliamentary report records that the Takeover Panel accepted Kraft's belief that it could keep the factory open was genuine. It also found Kraft lacked a reasonable basis for making the statement in the form it did. Kraft announced the closure decision on 9 February, and the factory closed the following January. Source 4
What Parliament later recorded about the Code
A 2015 Lords debate recounts that the Cadbury case prompted consultation and the 2011 amendments. The changes included a 28-day deadline for potential bidders, a ban on most inducement fees and more disclosure of plans and financing. The reforms came after the Cadbury bid. Source 5
Sources
- Kraft recommended final offer, 19 January 2010, SEC filing
- Kraft final prospectus, consideration and exchange-rate basis
- Kraft Form 8-K, 2 February 2010 acceptances and unconditional offer
- House of Commons report on Cadbury and the Takeover Panel finding
- House of Lords Hansard, 19 January 2015 account of the 2011 reforms