US food major Kraft has been given a 40 day deadline by the UK panel on takeovers and mergers either to make a formal proposal for British confectionery firm Cadbury or walk away from the deal.
In a statement, maker of Dairy Milk said that takeover panel has imposed a deadline of 5.00 pm on 9 November 2009 for Kraft Foods either make a firm intention to make an offer for Cadbury under takeover code, or announce that it does not intend to make an offer.
On September 7, Cadbury had rejected the proposed buyout offer made by Kraft Foods for 10.2 billion pounds, terming the proposal fundamentally undervalued the group and its prospects.
"The board's view has not changed since then and the board reiterates its rejection of Kraft's approach," Cadbury said in a statement on Wednesday.
Kraft Foods proposed to takeover Cadbury for 300 pence in cash and 0.2589 new Kraft Foods shares per Cadbury share. This values each Cadbury share at 745 pence and valuing the firm at 10.2 billion pounds.
Earlier on August 28, Kraft had made a proposal to the board of Cadbury which was rejected in a letter to the chairman and CEO of US food major on August 31.
"Cadbury has a strong position in the global confectionery market and the Board is confident in Cadbury's standalone pure play strategy and growth prospects. We have made our position on Kraft's proposal very clear and we welcome the Panel's decision today in the interests of obtaining clarity and certainty for our shareholders and employees at the earliest opportunity," Cadbury chairman Roger Carr said.
Kraft Foods believes that the proposed merger would create a geographically diversified combined business with significant scale in key developing markets, including India, Mexico, Brazil, China and Russia.
US major said the combined entity would create $50 billion in revenues for the company, with leading shares in snacking and an exceptional portfolio of confectionery and biscuit brands around the world.
