Birmingham-based chocolate maker releases an official defence document today to explain to its shareholders its rejection of a hostile bid from the giant US food firm Kraft.
The document says Kraft’s £9.8bn bid for the Birmingham-based chocolate maker “substantially undervalues” the company after a successful year of growth in all of its key markets
“Cadbury is an exceptional business worth much more than the offer put forward by Kraft,” said Cadbury chairman Roger Carr within the note. “It is clear to all that Cadbury is a particularly attractive asset in the sector with iconic brands, a sharp category focus and an enviable geographic footprint.
“We believe our shareholders should have the opportunity to reap the full rewards of the investment that has already been made in creating a platform for future improved revenue growth, enhanced profitability and high cash returns.”
The note included a trading and guidance update for 2009 and also set out some long term targets as part of its Vision into Action growth plan.
The targets relate to the next four years and include organic revenue growth of 5-7 per cent per year, improved margins of 16-18% by 2013, 80-90% operating cash conversion from 201o, and double digit growth in dividends per share from 2010 onwards.
As for its performance this year, Cadbury says it has had “continued growth in Chocolate, further improvements in Gum and excellent growth in Candy” as it reiterated its expectations of 4-6 per cent growth for this year. It says Kraft’s bid fails to recognise this success.
Cadbury pointed particularly to “strong momentum” in its emerging markets, led by India, Middle East and Africa and South America, while the market share for chocolate in the UK and gum in the US continue to grow impressively.
“Kraft is trying to buy Cadbury on the cheap to provide much needed growth to their unattractive low-growth conglomerate business model,” added Carr in his warning to the shareholders. “Don’t let Kraft steal your company with its derisory offer.”