- Tuesday's Heavy Dose of Data to Dictate 'Risk' Behavior
- World's Largest Share Issue Priced at Deep Discount
- Obama says Boosting US Jobs is Top Priority
- GM to Cut up to 9,500 Jobs in Europe
- Playboy to Outsource Most Magazine Operations: Report
- Why the Dollar Will Likely Stay Weak for Some Time
- Appeals Court Denies Microsoft's Alcatel Petition
- HP Comes in As Expected; Is It Time to Buy?
- Cramer: What Monday’s Housing Number Really Means
- Can Murdoch Help Bing Challenge Google and Shift the Content Equation?
- HP's Mark Hurd
- HP Comes in As Expected; Is It Time to Buy?
- 9 Stocks That Play Rising Water Costs: Strategists
- Weis' Deal Likely Won't Change Big Money Contracts
- Gold Prices Can Double in 3 Years: Portfolio Manager
- Nov. 23: Unusual Volume Leaders
- Help Wanted—Please Run $4 Billion University
- Apple Comes to AT&T's Rescue
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Why Amazon Rules Retail
- Wave of Debt Payments Facing US Government
- Paul: Audit the Fed
- China Eastern to Complete Shanghai Air Buy by End '09
- The Social Media Gaming Threat
- JAL Slides to Record Low on Bankruptcy Jitters
- Gold Will Collapse Like Oil Did in 2008: Charts
- Prepare For Large Decline In Stocks, Next Year?
- Nielsen Ratings Coming to Video Games
Text Size 
Senior News Editor, CNBC EMEA
When you have an initial bid rejected as derisory it is probably not a good idea to come back with a lower offer expecting a big change of heart from your prey.
Patrick Allen
CNBC Senior
News Editor
This though is exactly what the management team at Kraft [KFT
Loading...
()
] has decided to do in bid to win control of UK rival Cadbury [CBRY-LN
Loading...
()].
Because of the rise in Cadbury's share price, the bid now values its shares at 713 pence or 9.8 billion pounds ($16.44 billion) compared with 745p a share, or 10.2 billion pounds, in September, when Kraft made the same offer.
Cadbury’s CEO and Chairman have been very quick to dismiss the bid, fresh from telling a number of reporters over the weekend that they see no reason to join with a company that has traditionally been low growth and is now 'no growth'.
Cadbury itself last month unveiled very strong trading numbers.
A number of Cadbury's major shareholders have backed the management team's strategy, giving the impression that Kraft’s offer is dead in the water.
Why, you ask, would the management team at Kraft attempt such a strategy? There can be only two reasons as far as I can see.
1. With a 'put up or shut up' order in place, failure to put in a new offer would have forced them to walk away from the offer for 6 months. As a result, they have put the bid in with the intention of raising the offer at some point down the road when, if they are lucky, the pound could be even weaker boosting the value of its offer.
2. They plan to flush out any rival bidders. Given that the likes of Unilever and Nestle have yet to come to the table, the chances of a counter offer look remote. Kraft may be betting that if another bidder does not emerge and the stock market moves lower, the bid on the table will become more attractive to Cadbury shareholders.
 |
Martin Deboo, an analyst at Investec in London, told CNBC on Monday that he believes no other bidders will emerge and now expects a very long and drawn-out takeover battle.
The lawyers and M&A advisors will do well out of this story. Cadbury's and Kraft's rivals could do well out of this story, with management at both companies focused on a bid that will never succeed.
The rest of us, including shareholders in both companies, could simply feel like we have eaten too much chocolate…
- The show attracts a big TV audience every year, but this year it may take on even more importance.
- …you'll want to be prepared. Tips for getting the most out of the post-Thanksgiving shopping frenzy.
- Congressman Ron Paul explains to Squawk Box why he’s pushing legislation to audit the Federal Reserve.
- CNBC’s Phil LeBeau took a test drive of GM’s flagship electric car. Here’s what he thought of the Volt.
- The energy company Power Efficiency is building tools that regulate the power electric motors use.
- CNBC’s technology reporter Jim Goldman guides you through the best gadgets to buy this holiday season.
Data is a real-time snapshot *Data is delayed at least 15 minutes