Cadbury boss brands takeover suitor a 'low-growth conglomerate'

The chairman of confectioner Cadbury PLC said that Kraft Foods Inc undervalued his company in a takeover offer, and he dismissed the suitor as a "low-growth conglomerate".

Roger Carr laid out his opposition to Kraft's $16.7bn (€11.4bn) bid in an open letter to Kraft chief executive officer Irene Rosenfeld.

Kraft, the world's second-largest food maker, announced its cash-and-stock offer on Monday.

Since then, Kraft shares have fallen about 7%, which Mr Carr said made Kraft's bid an "uncertain value" for Cadbury shareholders.

Cadbury's board told Kraft of its opposition to a bid on August 31, and Mr Carr said nothing that Ms Rosenfeld has said since then changed that view.

Mr Carr said Kraft was asking his shareholders to give up ownership in a pure-play confectionery company for Kraft and its "considerably less focused business mix and historically lower growth".

The Cadbury chairman said that under Kraft's offer, "Cadbury would be absorbed into Kraft's low growth, conglomerate business model, an unappealing prospect" that contrasts with Cadbury's strategy to focus on making and selling sweets. Cadbury offloaded its US-based beverage company last year.

A spokeswoman for Kraft said the company had no comment on Mr Carr's letter.

Ms Rosenfeld said at an investor conference this week that combining the companies would strengthen Cadbury and give Kraft a boost in developing countries such as India and Mexico where the British confectioner has a strong presence. She said acquiring Cadbury would increase Kraft's revenue and earnings.

Rating agencies, however, have raised concerns that a deal would add to Kraft's debt. Moody's Investors Service and Fitch Ratings put Kraft on watch for possible downgrades.

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