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Biggies prefer chocolates over pizzas!!

Earlier this year, as we all know the management of Cadbury Plc termed Krafts Foods Inc’s offer to buy majority stake in Cadbury as “derisory”

But it still looks like Kraft wont end its pursuit of stake in Cadbury Plc so easily. Earlier this month it had affirmed its firm intentions by announcing that it will be selling its “US Pizza” unit to Swiss giant Nestle to raise cash component for its hostile Cadbury bid.

Looks like Nestle will be a winner in this hostile take-over attempt without even having to buy single Dairy Milk chocolate bar, leave aside a share.

Nestle will be able to buy US Pizza just at 12.5 times the estimated 2009 earnings.

This probably reminds us about the old story of “A monkey & two cats” which we read in childhood.

Kraft had to sell its pizza for raising cash because one of its major shareholder and Wizard of Omaha that is to say Mr. Warren Buffet didn’t approve the idea of raising so much cash by issue of shares of Kraft.

While searching the net for this subject I came across an official website of Cadbury Plc which has been designed exclusively for keeping the investors updated and for persuading them to not to sell their shares to kraft.

Click here to visit the microsite. (Actually the content there is quite interesting so you should have a look)

P.S. – For those who do not know, in a hostile take over the company wanting to increase its holding directly offers a price (may be in shares or in cash or both) to the shareholders of the target company. And then the shareholders have the option to either accept or reject the offer. So it is important for the management of the target company that the shareholders have faith in them as well as in their vision for company’s growth.

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