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Italian chocolatemaker Ferrero rules out buying UK's Cadbury

Italian chocolatemaker Ferrero has ruled out making a bid to purchase United Kingdom confectioners Cadbury. The move comes after Cadbury's board recommended accepting a takeover bid by United States firm Kraft that valued the company at £11.9 billion sterling.

Ferroro is best known for its Rocher branded chocolates and the advertisements that accompany them. It had been rumoured that the Italians would team up with another US firm, Hershey, to submit a joint bid for Cadbury. However, on Friday Hershey decided not to attempt to purchase Cadbury, who are most famous for Dairy Milk chocolates.

Both companies had been given yesterday as their deadline to declare their intentions regarding their British rival. Kraft now seem likely to achieve their aim of buying up the confectioner, after four months of negotiations and an offer that was increased twice. Italian newsppaer Il Sole 24 said Ferrero had backed out because of the amount of debt they would need to take on and a perceived requirement for job cuts.

Kraft are offering 500p cash per Cadbury share, plus Kraft stock. However, if some investors accept extra Kraft shares then up to 799p. The deal gives Cadbury a total value of 837p, down from the 850p orignally offered due to fluctuations in the exchange rate between the United States dollar and the pound sterling. "The final offer's value will change as the Kraft Foods share price and the USD/GBP exchange rate change," explained Kraft.

Jeremy Batstone-Carr, an analyst with Charles Stanley, said British stock investors were likely to not want Kraft shares. "UK-based investors are unlikely to want to hold Kraft stock... We believe that as many as half these holders... will be looking for alternative investment destinations here in the UK." Shareholders have until February 2 to consider the offer. If they accept, Cadbury will cease to be an independant company, which it has been since it was founded in 1824.



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