Shares in Cadbury soared by over 3 per cent this morning after the 186-year old British confectioner and maker of Dairy Milk chocolate confirmed it was finalising a deal to be taken over by Kraft Foods, the American food conglomerate.

In a terse joint statement, the pair said: “The boards of Kraft Foods and Cadbury confirm that they are finalising the terms of a recommended offer for Cadbury. A further announcement will be made shortly.”

The move ends one of the City’s most fiercely contested bid battles, and Cadbury’s decision is believed to have come after Kraft’s raised its offer from £10.5 billion to about £11.7 billion, or roughly 761p per Cadbury share to 840p a share, plus a 10p a share dividend to Cadbury shareholders.

Shares in Cadbury opened up 26p at 832.5p this morning.

The deal ends a proud history for Cadbury as an independent company. The chocolate maker, famous for brands such as Dairy Milk and Wispa, dates back to 1824 when John Cadbury, a Birmingham Quaker, began selling cocoa-based drinks in his tea and coffee emporium.

The takeover — which Lord Mandelson, the Business Secretary, had strongly opposed — is likely to be seen as something of a landmark in the British corporate sector.

Lord Mandelson, who was unable to intervene in the bid process, nonetheless warned Kraft last month: “If you think that you can come here and make a fast buck you will find that you face huge opposition from the local population . . . and from the British Government.”

It will also raise fears of job losses at Cadbury, which employs 45,000 people worldwide, including more than 9,000 in Britain. The trade union Unite has warned that Kraft plans at least 10,000 job cuts worldwide to slash costs and repay the cash it will need to borrow for the deal.

Kraft bought Terry’s, another iconic British chocolate company, in 1993 and closed its York factory two years later.

The takeover bid has created a huge outpouring of resentment against foreign takeovers of British companies, particularly in Cadbury’s Birmingham birthplace. In the past four years, more than £292 billion has been spent by foreign companies buying British rivals.

During the past decade, household names such as P&O, O2, Abbey, BAA, Jaguar Land Rover, the glass manufacturer Pilkington and the steelmaker Corus have all succumbed to foreign takeovers, along with a clutch of electricity and water companies. But few have aroused as strong feelings or emotions as the Cadbury bid.

Kraft owns confectionery brands such as Milka and Toblerone but suffers from a poor reputation among many in the food industry because it makes most of its money from processed cheese and meat. It originally tabled a £10.9 billion bid for Cadbury in September last year. The bid went hostile in November as Kraft made its proposals direct to Cadbury’s shareholders over the heads of its board.

Source : The Times

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