Cadbury Reiterates Rejection of Kraft Offer

The announcement came as Hershey is reportedly preparing to make a rival offer to compete with Kraft. Hershey has been in talks with credit-ratings companies in recent days about how to structure a bid.

15 Jan 2010 --- Cadbury plc has published its 2009 Performance Review and updating its second response document following the offer posted by Kraft Foods Inc. on 4 December 2009.

The 2009 Performance Review sets out the outstanding financial performance for 2009, including a strong second half revenue growth performance and another year of significant margin improvement. Highlights of 2009 include:

• 5% base business revenue growth; second half growth of 6% on same basis
• Trading margin of 13.5%; up 155 bps on a constant currency basis and 160 bps on an actual currency basis*
• All of Cadbury’s businesses contributed to good market shares and improved margin
• Vision into Action business plan well on track to deliver its 2011 goals

Commenting on the 2009 performance, Roger Carr, Chairman of Cadbury, said: “The performance of Cadbury in 2009 underlines our track record of strengthening our business and delivering improved results. The Board has great confidence in both our growth prospects and the potential for creating further, material shareholder value as a pure-play standalone confectionery business".

The updated Response Document also reiterates the further reasons why Cadbury believes Kraft’s Offer is even more unattractive today than it was a few weeks ago:

• The Offer price values Cadbury at only 11.9 times 2009 EBITDA*

• Since Kraft's approach on 7 September, the Board believes that Cadbury’s standalone value has risen further, reflecting the strong 2009 financial performance, upgraded targets for the next four years of its Vision into Action plan, substantial rises in global equity markets and the increased share prices of Cadbury's peers

• The majority of the Offer consideration comprises Kraft’s shares; this is unappealing given Kraft’s unattractive business model and poor track record of delivery

Commenting on Kraft’s Offer, Roger Carr, Chairman of Cadbury, added: "Kraft’s Offer is even more unattractive today than it was when Kraft made its formal offer in December. Our 2009 performance is ahead of our previously upgraded expectations and we have excellent momentum going into 2010.”

"Kraft's offer is very significantly below all comparable transactions in the sector; applying any of the comparable multiples would imply a price per share far above Kraft’s offer. Over half the offer consideration is in the form of Kraft shares, exposing our shareholders to Kraft’s low growth conglomerate business model, its long history of underperformance and its track record of missed targets.”

“Don’t let Kraft steal your company with its derisory offer."

The announcement came as Hershey is reportedly preparing to make a rival offer to compete with Kraft. Hershey has been in talks with credit-ratings companies in recent days about how to structure a bid without imperiling its investment-grade debt rating, said people close to the situation. It’s also been drafting commitment letters with its lenders, JPMorgan Chase & Co. and Bank of America Corp., to secure a multi-billion-dollar loan package, the people said.