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UK-listed confectioner Cadbury held a board meeting yesterday afternoon to be kept abreast of developments following Kraft’s third quarter results that were announced on Tuesday, people familiar with the situation told dealReporter.
”It is normal for the Cadbury board to be discussing tactics with its advisers, with the expectation of a bid coming,” another source with knowledge of the situation said. ”Kraft’s results being weaker than expected would need to be considered and the board need to be kept appraised of developments,” the source added.
Two people familiar with the situation said that Cadbury still has not received any contact from Kraft regarding a firm offer. The people expected that if Kraft were to make a firm offer it would wait until Monday, the last day permitted under the UK Takeover Panel’s ’put up or shut up deadline’, since it has always played a long game and has no overwhelming need to do it on Friday, the people thought. ”Thank goodness there is a ’put up or shut up’ in place,” one person said.
The other noted that Monday was the most likely timing for any bid since Kraft will be talking to its own shareholders in the next couple of days, bringing them onside. ”Kraft led people to believe it would have good results and then it did not. This could anger its shareholders … they would have to be brought back onside.”
Kraft met Cadbury regarding the potential deal on 29 August. The proposal was knocked back and Kraft quickly went public with its bid on 7 September. Kraft now has until 9 November to come back with a firm offer for Cadbury after it was issued with the UK Takeover Panel’s bid deadline. The current bid offers Cadbury investors 300p per share in cash plus 0.2589 Kraft for each share owned.
A person close to Kraft noted that any firm offer would be subject to standard pre-conditions such as regulatory approvals and an acceptance condition. But at the 9 November deadline, Kraft would have to launch an offer with conditions, rather than a ‘pre-conditional offer’, or walk, they added. Asked whether Kraft would make contact with Cadbury before launching a firm offer, this person questioned whether Cadbury would want to enter into discussions. ”We know what they would respond.”
The Cadbury camp has questioned why Kraft has not yet submitted a filing with the SEC including the details of the takeover. However, the person close to Kraft pointed out that it is normal not to start an SEC filing before deciding on a firm bid. The person added that the Kraft camp believe there is plenty of time within the UK takeover offer period to facilitate the SEC’s approval process that can run anywhere from two weeks to 90 days. Kraft would not be ‘timed out’ in the process, this person said.
Cadbury and Kraft declined to comment.
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